Editor's Note:

The market's drop this past week has rough on a lot of our watch list candidates. We have a few where we're waiting for a breakout over resistance. That is unlikely to happen any time soon. Readers may want to consider some alternative entry points listed below.

Meanwhile I have adjusted our entry points for MCD and QCOM.

- James



New Watch List Entries

ATVI - Activision/Blizzard, Inc.


Active Watch List Candidates

APC - Anadarko Petroleum

EBAY - eBay Inc.

ERTS - Electronic Arts

MCD - McDonald's Corp

MSFT - Microsoft Corp.

NVDA - NVIDIA Corp

QCOM - QUALCOMM

TJX - TJX Cos. Inc.

USO - U.S. Oil ETF


Dropped Watch List Entries

INTC and RAI jumped from our watch list to the play list.



New Watch List Candidates:


Activition/Blizzard, Inc. - ATVI - close: 12.05

Company Info

The merger between Activision and Blizzard created a monster in the video game space. The company has made headlines in recent days with the largest entertainment launch in world history with its "Call of Duty: Modern Warfare 3" title. On its first day ATVI racked up $400 million in sales and in the first five days the total hit $775 million, setting new records for any entertainment title (movies, books, video games, etc.). I suspect that sales will continue to soar as we move closer to the Christmas.

Why are shares down so sharply in the last two weeks? It looks like a simple sell-the news reaction. The stock soared prior to the release of CoD:MW3 and sold off on the actual launch. Now shares are testing support near $12.00. This could be an entry point.

Aggressive traders may want to go ahead and buy calls now. However, I want to be a little cautious here. There was a gap down this past week from $12.80. I am suggesting we wait for ATVI to close above $13.00 and then we'll initiate call positions the next morning with a stop loss at $11.75. Our long-term target is $15.75.

Wait for a close over $13.00

BUY the 2013 Jan $15 call (ATVI1319A15)

Chart of ATVI:

Originally listed on the Watch List: 11/19/11


Active Watch List Candidates:



Anadarko Petroleum - APC - close: 76.70

Comments:
11/19 update: crude oil surged to new relative highs and yet the oil stocks were hammered lower along with everything else. APC is flirting with a breakdown under its 200-dma and the $75.00 level. Currently our plan is to buy calls if APC can close over $85.25. More nimble traders may want to consider buying a bounce off the $70.00 level with a tight stop as an alternative entry point.

If triggered with the close over $85.25, we'll buy calls the next morning with a stop loss at $77.00. Our long-term target is $109.

Wait for a close over $85.25

BUY the 2013 Jan $110 call (APC1319A110)

Originally listed on the Watch List: 11/12/11


eBay Inc. - EBAY - close: 29.81

Comments:
11/19 update: EBAY also delivered a terrible week. Shares broke down under support in the $31.00-30.50 zone. The stock looks headed for the bottom of its trading range in the $28.00-27.00 area. Nimble traders might want to consider buying a dip or a bounce in that zone. Currently our plan is to wait for a close over resistance at $35.00. We'll probably adjust our entry strategy in the next week or two.

Earlier Comments:
I am suggesting investors wait for a close over resistance at $35.00. If that occurs we'll open bullish positions the next day with a stop loss at $29.95. Our long-term target is $45.00.

Trigger: Buy a close over $35.00

BUY the 2013 Jan $40 call (EBAY1319A40)

Originally listed on the Watch List: 10/22/11


Electronic Arts - ERTS - close: 21.99

Comments:
11/19 update: ERTS has broken down to new relative lows. Shares will be testing their 200-dma soon. Currently our plan is to buy calls if ERTS can close over $26.00. However, we might adjust our entry point strategy if we can see ERTS bounce from the $20.00 level.

Earlier Comments:
I am suggesting we wait for ERTS to close over $26.00 and we'll launch call LEAPS positions the next morning with a stop loss at $21.95.

Wait for ERTS to close over $26.00

BUY the 2013 Jan $30 call (ERTS1319A30)

Originally listed on the Watch List: 11/05/11


McDonald's Corp. - MCD - close: 92.74

Comments:
11/19 update: I am not convinced the market's pull back is over yet. Therefore I am adjusting our buy-the-dip entry point on MCD from $91.00 down to $90.00 but we will leave the stop loss at $86.75. We will set our long-term target at $108.00.

Buy-the-Dip trigger: $90.00

BUY the 2013 Jan $100 call (MCD1319A100)

Originally listed on the Watch List: 11/05/11


Microsoft Corp. - MSFT - close: 25.30

Comments:
11/19 update: It was an ugly week for tech stocks and MSFT fell to new multi-week lows. Shares also broke down under their 200-dma. Currently our plan is to wait for a close over resistance at $27.50. However, that may not happen any time soon. We might want to consider an alternative entry point and look for a bounce from what should be support near $24.00 instead. Nimble traders may want to buy a dip or a bounce at $24.00 with a tight stop at $23.40.

Earlier Comments:
I am suggesting we wait for MSFT to close over resistance at $27.50. If this happens we'll buy calls the next morning with a stop loss at $25.45. Our exit target will be $31.25 but we'll make adjustments as needed.

Wait for a close over $27.50

BUY the 2013 Jan $30 call (MSFT1319A30)

- or -

BUY the 2014 Jan $30 call (MSFT1418A30)

Originally listed on the Watch List: 11/12/11


NVIDIA Corp. - NVDA - close: 13.93

Comments:
11/19 update: It's the same story here. Weakness in technology stocks has pushed NVDA lower. Yet shares have not broken down to new relative lows yet. Currently our plan is to wait for a close over $16.00. That's probably not going to happen any time soon. We'll give NVDA another week or two and then re-evaluate our entry point strategy or remove it from the watch list. If NVDA breaks down under $13.50 I would expect a drop toward the $12.50-12.00 zone.

Earlier Comments:
I am suggesting we wait for a close over the $16.00 level and then open positions the next day. We'll start bullish positions with a stop loss at $13.90. Our long-term target is $22.50.

NOTE: Due to NVDA's volatility this is an aggressive trade. We want to keep our position size small.

Wait for a close over $16.00 (small positions)

BUY the 2013 Jan. $20 call (NVDA1319A20)

Originally listed on the Watch List: 10/29/11


QUALCOMM Inc. - QCOM - close: 55.67

Comments:
11/19 update: Hmm... after two and a half weeks of churning sideways I am starting to think QCOM could see a deeper correction than I initially expected. Shares could fill the gap, which means a drop toward $52.25. I am adjusting our entry point. We'll use a buy-the-dip trigger at $52.50 with a stop loss at $49.40. Our long-term target is $74.50.

Earlier Comments:
QCOM recently reported much better than expected earnings, beating both the top and bottom line estimates. Management raised their guidance looking ahead. The company is reaping the benefits from the booming smartphone market. The CEO said there is over 300 new devices in development that will use QCOM electronics inside. That sounds like there is a lot of potential for growth.

Buy-the-Dip trigger: $52.50

BUY the 2013 Jan $60 call (QCOM1319A60)

Originally listed on the Watch List: 11/05/11


TJX Cos. Inc. - TJX - close: 59.54

Comments:
11/19 update: I was hoping that TJX might see some profit taking after its earnings report on November 15th. The company reported numbers that were in-line with Wall Street estimates. Guidance was also in-line with prior numbers. It is a bit surprising that TJX didn't sell-off more since the results failed to surprise. There is a still a chance the stock corrects since the market's major indices look vulnerable here. We will leave our buy-the-dip entry point at $56.25 for now. If triggered we'll use a stop loss at $52.40.

Buy-the-Dip trigger: $56.25

BUY the 2013 Jan $60 call (TJX1319A60)

11/12/11 new trigger @ 56.25, new stop 52.40
10/29/11 adjusted trigger to $55.00, stop to $51.75
10/15/11 adjusted entry point to buy the dip at $54.00, stop at $51.45

Originally listed on the Watch List: 09/24/11


U.S. Oil ETF - USO - close: 37.82

Comments:
11/19 update: Oil surged to new multi-month highs this past week. After a huge move off its October lows the rally could be losing steam. I don't see any changes from my prior comments about the potential for the situation in Iran to send oil sharply higher but there is no serious time frame for that to occur, at least I hope it's not soon. The bigger threat to oil might be growing worries that China's economy is not as healthy as it seems. If China's growth is slowing and Europe's growth is slowing then oil demand should drop.

Longer-term we are still very bullish on oil. I am suggesting we buy calls on a dip at $36.00. The $35.00 level should offer some support. If triggered we'll use a stop loss at $33.75, under the 50-dma. Our long-term target is the $45-50 zone.

Buy-the-Dip trigger: $36.00

BUY the 2013 Jan $40 call (USO1319A40)

- or -

BUY the 2013 Jan $50 call (USO1418A50)

Originally listed on the Watch List: 11/12/11