Editor's Note:

We are cleaning up the watch list tonight. I've removed some candidates that may not get triggered any time soon. We're replacing them with a handful of new candidates.

- James



New Watch List Entries

MMM - 3M Co.

SHW - Sherwin-Williams

XOM - Exxon Mobil


Active Watch List Candidates

APC - Anadarko Petroleum

FDO - Family Dollar Stores

MCD - McDonald's Corp

NVDA - NVIDIA Corp

TJX - TJX Cos. Inc.

USO - U.S. Oil ETF

WMT - Wal-Mart Stores Inc.


Dropped Watch List Entries

RIG has graduated to the play list. We have chosen to remove EBAY, ERTS, and MSFT from the watch list.



New Watch List Candidates:


3M Co. - MMM - close: 79.76

Company Info

Dow Jones Industrial component MMM is building on a bottom after a painful third quarter. Shares still have a lot of overhead resistance in the $83-85 zone, especially with the simple and exponential 200-dma(s). If shares can breakthrough these levels then MMM could make a run at its 2011 highs.

I am suggesting we buy calls after MMM closes above $85.00. We'll use a stop loss at $78.90. Our long-term target is $97.00.

We are listing the 2013 calls. MMM does have 2014s available.

Wait for Close over $85.00, then buy calls, stop: 78.90

BUY the 2013 Jan $95 call (MMM1319A95)

Chart of MMM:

Originally listed on the Watch List: 12/03/11


Sherwin-Williams Co. - SHW - close: 85.87

Company Info

SHW makes paints and coatings and distributes them on a global scale. The stock has seen a rally back to major resistance in the $87-88 zone. A breakout past this level would be new all-time highs for SHW. I am suggesting investors wait for SHW to close over $88.00 and then buy calls the next session with a stop loss at $82.45. If triggered our long-term target is $99.50. FYI: The Point & Figure chart for SHW is bullish with a $92 target.

Wait for SHW to close over $88.00, then buy calls, stop: 82.45

BUY the 2013 Jan $100 call (SHW1319A100)

Chart of SHW:

Originally listed on the Watch List: 12/03/11


Exxon Mobil -XOM - close: 79.79

Company Info

XOM is one of the largest oil giants on the planet. Shares appear to be breaking out from a bull flag pattern. This past week's close over the simple 200-dma is also bullish. Yet I want to see more confirmation. XOM has a bearish trend of lower highs starting at the April (2011) peak.

I am suggesting investors wait for XOM to close over $82.00 and then buy calls the next day with a stop loss at $76.40. There is potential resistance at $85 and $87.50 but our long-term target is $94.00.

Wait for XOM to close over $82.00, then buy calls, stop 76.40

BUY the 2013 Jan $90 call (XOM1319A90)

- or -

BUY the 2014 Jan $95 call (XOM1418A95)

Chart of XOM:

Originally listed on the Watch List: 12/03/11


Active Watch List Candidates:



Anadarko Petroleum - APC - close: 80.48

Comments:
12/03 update: APC has seen a significant jump from under $72 to over $80 in a week. Yet the stock remains inside the very wide trading range and under resistance at the $85.00 level. I don't see any changes from my prior comments. We have two different entry points.

In summary, if APC closes over $85.25 then we'll buy calls the next day with a stop loss at $77.00 and we want to use the 2013 Jan $110 calls. On the other hand if APC hits $62.00 (on an intraday basis) then we'll buy calls at $62.00 with a stop loss at $56.50 and we'll use the 2013 $90 calls.

Wait for a close over $85.25 (stop loss $77.00)

BUY the 2013 Jan $110 call (APC1319A110)

- or -

buy calls on a dip at $62.00 (stop loss $56.50)

buy the 2013 Jan $90 call (APC1319A90)

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


Activition/Blizzard, Inc. - ATVI - close: 12.27

Comments:
12/03 update: The rebound in ATVI stalled at the $12.50 level and its 20-dma. I would expect a pull back toward $12.00 soon. Aggressive traders might try buying a bounce off $12.00 or the 200-dma near $11.70. I am still suggesting readers wait for a much bigger move higher. We're listing a trigger to wait for ATVI to close over $13.00 and then initiate call positions the next morning with a stop at $11.90 (new). Our long-term target is $15.75.

Wait for a close over $13.00

BUY the 2013 Jan $15 call (ATVI1319A15)

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


eBay Inc. - EBAY - close: 29.60

Comments:
12/03 update: The rebound in EBAY really didn't keep pace with the rest of the market. I am removing EBAY from our watch list. Aggressive traders might still want to consider buying a bounce off the $27.50-27.00 zone.

Trade Never Opened.

12/03/11 We are giving up. EBAY's bounce failed to keep pace with the market.
11/26/11 updated strategy to use a dip at $27.25 and a stop at $25.75, changed option to 2013 $35 call.

Chart of EBAY:

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


Electronic Arts - ERTS - close: 23.00

Comments:
12/03 update: ERTS saw a nice bounce last week. Yet the stock struggled with new resistance near $23.80 the last couple of days and shares underperformed on Friday with a -1.4% decline. I still think ERTS could be a buy on a dip near $18.50 but that could take a while to occur. I'd also look at ERTS if shares close over $25.50. In the meantime I am removing ERTS from our watch list. It's unlikely to hit either trigger any time soon.

Trade Never Opened.

12/03/11 We are removing ERTS as a candidate
11/26/11 updated strategy to use a dip at $18.50 and a stop at $17.40, changed option to 2013 $25 call.

Chart of ERTS:

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


Family Dollar Stores Inc. - FDO - close: 58.70

Comments:
12/03 update: Last week's breakout makes FDO look like a short-term buy although I'd wait for a dip near $58.00. Longer-term I would not want to open positions here. We will adjust our buy-the-dip entry point to $54.50 so it's above the 100 and 200-dma. I am adjusting our stop loss to $51.25. I am suggesting we keep our position size small. Our long-term target is $69.50.

Buy-the-Dip trigger: $54.50, stop loss 51.25

BUY the 2013 Jan $60 call (FDO1319A60)

12/03/11 Adjusted trigger to buy the dip at $54.50 and stop loss to $51.25, they were 53.00 and $49.45.

Originally listed on the Watch List: 11/26/11


McDonald's Corp. - MCD - close: 95.70

Comments:
12/03 update: MCD surged from $92 to $96 last week. The rally might continue as fund managers look to window dress their portfolios with strong stocks prior to the end of the year. Yet given our long-term outlook we don't want to chase MCD here. We'll leave our buy-the-dip entry point at $90.00 (stop loss @ 86.45). Our long-term target is $108.00. More aggressive traders might want to buy a dip near the 50-dma instead.

Buy-the-Dip trigger: $90.00

BUY the 2013 Jan $100 call (MCD1319A100)

11/26/11 adjusted stop loss to $86.45

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


Microsoft Corp. - MSFT - close: 25.22

Comments:
12/03 update: MSFT's bounce last week stalled at resistance in the $25.60 area. At the moment it looks like a normal oversold bounce. While MSFT might still offer some opportunity on a dip near $24.00 I am removing MSFT from our watch list.

Trade Did Not Open

12/03/11 Removing MSFT from the watch list.
11/26/11 adjusted our entry point to buy small positions on a dip at $23.85 with a stop loss at $23.35. New strike prices.

Chart of MSFT:

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


NVIDIA Corp. - NVDA - close: 15.72

Comments:
12/03 update: I would keep a close eye on NVDA. The stock could be in play this coming week. Shares have seen a rebound back to resistance near the $16.00 level. Shares actually hit $16.05 on Friday but our entry point called for NVDA to close above the $16.00 mark. Shares also have potential technical resistance at the simple 200-dma currently at $16.19. I am adjusting our entry point to buy calls on NVDA when the stock closes above $16.25. If that occurs we will buy calls the next morning. More nimble traders may want to buy calls on NVDA when it hits $16.25 on an intraday basis instead since a breakout past $16.00 could spark some short covering and NVDA might surge several percentage points on that session.

Earlier Comments:
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 $16.25 (small positions)

BUY the 2013 Jan. $20 call (NVDA1319A20)

12/03/11 Adjusted entry strategy to wait for close over $16.25.

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


TJX Cos. Inc. - TJX - close: 62.24

Comments:
12/03 update: TJX has continued to perform well and shares closed at new all-time highs. Like MCD we could TJX continue to climb as fund managers dress up their portfolios for year end. Yet I wouldn't chase it here, not with long-term positions. Currently we have a buy-the-dip entry point at $56.25 (stop loss @ 52.40). We will leave it like this for another week or two and then re-evaluate.

Buy-the-Dip trigger: $56.25, stop loss 52.40

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: 39.03

Comments:
12/03 update: Oil rallied with stocks last week. Yet the USO did not make a new high. I am still expecting a correction and don't see any changes from my comments a week ago.

We do want to keep our position size in the USO small. Oil can be a volatile commodity and this ETF is continually rolling over its futures positions to avoid taking delivery, which can cause swings in the ETF's price.

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. 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


Wal-Mart Stores Inc. - WMT - close: 58.09

Comments:
12/03 update: WMT managed a bounce last week but the action is not looking very bullish. Shares have created a lower high and Friday's session was disappointing. Bears could argue this is a bearish double top pattern. There is support near $56.00 but I am suggesting we wait for a dip toward stronger support near $54.00. We'll use an entry point at $54.50. Our long-term target is $63.50.

It could take a few weeks before WMT hits our entry point, just keep this one on your watch list.

Buy-the-Dip trigger: $54.50, stop loss @ 51.75

BUY the 2013 Jan $60 call (WMT1319A60)

- or -

BUY the 2014 Jan $60 call (WMT1418A60)

Originally listed on the Watch List: 11/26/11