Editor's Note:

In addition to the new candidates on tonight's watch list these stocks are on my radar screen. I wouldn't buy options yet but they're worth watching.

ARG, MMP, TICC, MYL, SHAW, YUM, AKAM, JNPR,

- James



New Watch List Entries

NKE - Nike Inc.

V - Visa Inc.


Active Watch List Candidates

DVN - Devon Energy

FDO - Family Dollar Stores

LLY - Eli Lilly

MCD - McDonald's Corp

MMM - 3M Co.

MSI - Motorola Solutions

ONNN - ON Semiconductor

TEVA - Teva Pharmaceuticals


Dropped Watch List Entries

LDK, VZ, SHW, XOM and PEP all graduated from the watch list to the play list (or new play section).



New Watch List Candidates:


Nike Inc. - NKE - close: 96.90

Company Info

NKE made headlines this past week when customers started a brawl over the company's newly released Air Jordans. The could end up causing a stir as well. Shares have been consolidating sideways under the $98.00 level the last several weeks. The long-term trend is up.

I am suggesting we buy calls on NKE after the stock closes above $98.50. More conservative traders may want to wait for NKE to close above $100.00 instead since the $100 mark could be round-number resistance. Our long-term target is $119.00. FYI: The Point & Figure chart for NKE is bullish with a $115 target.

NOTE: 2014 calls are available but they're high-dollar options.

Wait for a close over $98.50, stop loss 92.25

BUY the 2013 Jan $110 call (NKE1319A110)

Chart of NKE:

Originally listed on the Watch List: 12/24/11


Visa, Inc. - V - close: 102.48

Company Info

Shares of V have been showing relative strength with a breakout to new highs and past round-number resistance at $100 this past week. More aggressive traders may want to buy calls now. We'd like to catch Visa on a dip. Broken resistance near $98.00 should offer new support. I am suggesting we buy calls on a dip at $98.25 with a stop loss at $92.25. Our long-term target is $119.00. FYI: The Point & Figure chart for V is bullish with a $129 target.

Buy-the-Dip trigger: $98.25, with a stop loss @ 92.25

BUY the 2013 Jan $110 call (V1319A110)

Chart of V:

Originally listed on the Watch List: 12/24/11


Active Watch List Candidates:



Activition/Blizzard, Inc. - ATVI - close: 12.20

Comments:
12/24/11 update: ATVI was showing some relative strength on Friday and broke through resistance near $12.00 and its 100-dma near $12.13. You could argue that ATVI has formed a bullish double bottom with the late November and last week's lows. Aggressive traders might want to buy calls now. I still see resistance near $12.50 and its 50-dma so we'll wait.

I am 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. 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


Devon Energy - DVN - close: 62.51

Comments:
12/24/11 update: DVN saw a decent bounce off last week's low but I wouldn't buy it here. If we do not see DVN continue to improve this coming week then we'll drop it as a candidate. Currently the plan is to buy calls if DVN can close over $70.25. Our long-term target is $89.

FYI: 2014 calls are also available.

Wait for DVN to close over $70.25, buy calls the next day, stop 62.50

BUY the 2013 Jan $80 call (DVN1319A80)

Originally listed on the Watch List: 12/10/11


Family Dollar Stores Inc. - FDO - close: 58.76

Comments:
12/24/11 update: FDO is still bouncing off a trendline of higher lows that started back in early August. It seems unlikely that we're going to see FDO dip toward support in the $55-54 zone. Therefore we will adjust our entry point. The new plan is to buy calls if FDO can close over $61.00. We'll use a stop loss at $55.75. Our target is $74.50.

I consider this a more aggressive entry point. We want to keep our position size small.

I have adjusted our option strike.

FYI: FDO's earnings are early January. Readers might want to wait until after we see the market's reaction to the earnings news first before considering new positions.

Wait for a close over $61.00, stop loss @ 55.75 (small positions only)

BUY the 2013 Jan $70 call (FDO1319A70)

12/24/11 adjusted entry point strategy. wait for a close over $61.00
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


Eli Lilly - LLY - close: 41.64

Comments:
12/24/11 update: Investors remain on the defensive. High-dividend, safety trades like LLY are still attracting cash. Yet we do not want to chase it after such a big rally off its late November lows. Our plan is unchanged.

We're suggesting a buy-the-dip entry point at $39.50 with a stop loss at $37.40. Our long-term targets are $44.75 and $48.00.

Buy-the-Dip trigger: $39.50

BUY the 2013 Jan $45 call (LLY1319A45)

- or -

BUY the 2014 Jan $45 call (LLY1418A45)

Originally listed on the Watch List: 12/17/11


McDonald's Corp. - MCD - close: 100.15

Comments:
12/24/11 update: Shares of MCD continue to show relative strength. This past week saw the stock breakout past round-number, psychological resistance at the $100 mark. Shares still seem overbought. We do not want to chase it here. However, we will adjust our entry point to buy a dip at $95.50 and a stop loss at $89.50. Our long-term target is $108.00.

Buy-the-Dip trigger: $95.50, stop 89.50

BUY the 2013 Jan $100 call (MCD1319A100)

12/24/11 adjusted entry point to $95.50, stop loss to $89.50
12/17/11 adjusted entry point to $91.50, stop loss to $87.25
11/26/11 adjusted stop loss to $86.45

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


3M Co. - MMM - close: 82.20

Comments:
12/24/11 update: MMM is bouncing back after a test of its trend of higher lows. The stock is nearing resistance in the $82.50-83.00 zone and its 100-dma and exponential 200-dma. More aggressive traders might want to buy calls if MMM can close over $83.50. We are leaving our entry point unchanged with plans to open bullish positions when MMM closes over $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)

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


Motorola Solutions, Inc. - MSI - close: 47.12

Comments:
12/24/11 update: MSI spent the week consolidating sideways while respecting the bullish trend of higher lows. Shares are poised to breakout past short-term resistance at $47.50 soon. We're still waiting for a breakout to new highs.

I am suggesting we wait for MSI to close above $48.25 and then buy calls the next day with a stop loss at $43.75. Our long-term target is $64.50. The Point & Figure chart is bullish with a $58 target.

FYI: 2014 calls are also available.

Wait for MSI to close over $48.25, buy calls the next day, stop 43.75

BUY the 2013 Jan $55 call (MSI1319A55)

Originally listed on the Watch List: 12/10/11


ON Semiconductor Corp. - ONNN - close: 7.60

Comments:
12/24/11 update: ONNN is starting to bounce from the bottom of its trading range. You could argue the recent bounces near the $7.00 level represent a new bullish double bottom. Aggressive traders could launch positions here. I am still suggesting investors wait for ONNN to close over $8.50 and then buy calls the next day with a stop loss at $7.70. More conservative traders may want to wait for ONNN to close over its simple 200-dma instead. Our long-term target is $11.45. I would keep our position size small.

Wait for ONNN to close over $8.50, buy calls the next day, stop 7.70

BUY the 2013 Jan $10 call (ONNN1319A10)

(small positions)

Originally listed on the Watch List: 12/10/11


Teva Pharmaceuticals Industries - TEVA - close: 41.67

Comments:
12/24/11 update: TEVA saw some volatility on Wednesday but traders bought the dip near support at $40.00 and its 50-dma. The reason for the volatility was news that TEVA was guiding its 2012 earnings estimates lower. The company tried to offset this bad news with an announcement the company would launch a $3 billion stock buy back program over the next three years. At current values that is about 8% of the company's outstanding shares.

Currently our plan is to buy calls when TEVA closes over $45.25. More aggressive traders may want to jump in early if TEVA can close over $44.00.

Breakout trigger: Wait for TEVA to close over $45.25 and then buy calls the next day, stop loss @ 41.75

BUY the 2013 Jan $50 call (TEVA1319A50)

(FYI: 2014 calls are available)

Originally listed on the Watch List: 12/17/11