New Watch List Entries

TEVA - Teva Pharmaceuticals


Active Watch List Candidates

LXK - Lexmark Intl.

MCD - McDonald's Corp

MMM - 3M Co.

MSI - Motorola Solutions

ONNN - ON Semiconductor

SHAW - Shaw Group

V - Visa Inc.

YUM - Yum,! Brands


Dropped Watch List Entries

FDX and NKE graduated to the play list.



New Watch List Candidates:


Teva Pharmaceuticals - TEVA - close: 44.55

Company Info

TEVA is back! Shares have displayed impressive relative strength in January. The stock has broken out to new relative highs and powered past technical resistance at the 150-dma, exponential and simple 200-dma. Now TEVA is consolidating sideways under resistance at $45.00 near its April 2011 low.

I am suggesting we open bullish positions if TEVA can close over $45.25. If triggered we'll use a stop loss at $39.75. More conservative traders might consider a stop closer to $42 instead. Our long-term target is the $54.00 level. FYI: The Point & Figure chart for TEVA is bullish with a $57 target.

Breakout trigger: Wait for a close over $45.25, stop loss 39.75

BUY the 2013 Jan $50 call (TEVA1319A50)

- or -

BUY the 2014 Jan $50 call (TEVA1418A50)

Chart of TEVA:

Originally listed on the Watch List: 01/14/12


Active Watch List Candidates:



Activition/Blizzard, Inc. - ATVI - close: 12.24

Comments:
01/14/12 update: ATVI and rival EA were down on Friday thanks to news that video game sales for 2011 lagged 2010's pace. I fail to see why ATVI would complain when their Call of Duty Modern Warfare 3 was the best selling entertainment title ever reaching $1 billion in sales in just over two weeks. The stock lost -2.5% anyway and is back under its 50-dma. I don't see any changes from my prior comments.

Our plan is to wait for ATVI to close over $12.75 and then buy calls the next day. Our long-term target is $15.75.

Wait for a close over $12.75 (stop 11.90)

BUY the 2013 Jan $15 call (ATVI1319A15)

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


Lexmark Intl. Inc. - LXK - close: 34.72

Comments:
01/14/12 update: LXK is still inching higher and shares look poised to breakout past resistance at $35.00. I am suggesting we wait for LXK to close above $35.25 and then buy calls the next day with a stop at $31.75. There is some resistance near $40 but our long-term target is $44.00.

NOTE: LXK is due to report earnings in very late January or early February. We don't have a confirmed date yet. Investors may want to wait and see how the market reacts to LXK's earnings report before considering new positions.

FYI: The Point & Figure chart on LXK is bullish with a $51 target.

Wait for a close over $35.25, stop loss 31.75

BUY the 2013 Jan $40 call (LXK1319A40)

Originally listed on the Watch List: 01/07/12


McDonald's Corp. - MCD - close: 100.35

Comments:
01/14/12 update: MCD continues to consolidating sideways. If you look hard enough you'll see a pennant pattern. These are supposed to be neutral but stocks tend to breakout in the direction of the previous trend and in this case that's higher. However, there is a chance that MCD will see some profit taking when they announce earnings on January 24th. I would wait for a dip.

The plan is to buy calls on a dip at $95.50 with 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: 83.60

Comments:
01/14/12 update: MMM is still flirting with resistance near $85.00 and its simple 200-dma. I am still suggesting we wait for MMM to close over $85.00 before initiating positions. If triggered use a stop at $78.90. Readers may want to wait until after we see MMM's earnings report on January 26th before considering new positions. 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: 46.48

Comments:
01/14/12 update: MSI is essentially flat for the week. I don't see any changes from my prior comments. If MSI doesn't make any progress by the end of January we might drop it as a candidate. Keep in mind that MSI is due to report earnings on January 25th. Investors may want to wait and see how the market reacts to earnings before considering new positions.

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: 8.11

Comments:
01/14/12 update: ONNN rallied right up to resistance at $8.50 and reversed. That's not too surprising. Shares made need to generate some steam before finally breaking out from its trading range.

I am 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


Shaw Group Inc. - SHAW - close: 27.67

Comments:
01/14/12 update: SHAW spent last week consolidating sideways on either side of technical resistance at its simple 200-dma. Shares still look a little overbought given the big rally from its December lows. I am suggesting we wait and buy a dip at $25.00 with a stop loss at $22.35. I would start with small positions to limit risk.

FYI: The Point & Figure chart on SHAW is bullish with a $37 target.

Buy-the-Dip trigger: $25.00, stop loss @ 22.35

BUY the 2013 Jan $30 call (SHAW1319A30)

- or -

BUY the 2014 Jan $30 call (SHAW1418A30)

Originally listed on the Watch List: 01/07/12


Visa, Inc. - V - close: 100.74

Comments:
01/14/12 update: Visa is virtually flat for the week. Traders did buy the dip at its rising 30-dma. If we had a short-term time frame I would be tempted to buy calls now. However, earnings are coming up on February 8th. Readers may want to wait until after Visa reports before considering new positions.

Currently our plan is to buy a dip at $96.00 with a stop at $89.75. Our long-term target is $119.00.

Readers may want to consider an alternative entry point like a close over $104.00 with a stop near $99.00 instead.

NOTE: Rival MasterCard reports earnings on February 2nd.

Buy-the-Dip trigger: $96.00, with a stop loss @ 89.75

BUY the 2013 Jan $110 call (V1319A110)

01/07/12 Adjusted entry point strategy to buy a dip at $96.00 with a stop at $89.75.

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


Yum! Brands, Inc. - YUM - close: 61.23

Comments:
01/14/12 update: YUM has continued to rally and shares are at new record highs. I don't want to chase it. We will adjust our strategy to use a buy-the-dip trigger at $57.50 with a stop loss at $53.75. Our long-term target is $69.00.

NOTE: YUM is due to report earnings on February 6th. Investors may want to wait and see how the market reacts to YUM's earnings report before considering new positions.

FYI: The Point & Figure chart on YUM is bullish with an $84 target.

Buy-the-Dip trigger: $57.50, stop loss $53.75

BUY the 2013 Jan $60 call (YUM1319A60)

- or -

BUY the 2013 Jan $65 call (YUM1418A65)

01/14/12 adjusted entry point strategy to use a trigger at $57.50 and a stop at $53.75

Originally listed on the Watch List: 01/07/12