New Watch List Entries

ADM - Archer-Daniel-Midland Co.

LVS - Las Vegas Sands

MRVL - Marvell Technologies

RDC - Rowan Companies


Active Watch List Candidates

FXI - iShares China ETF

MCD - McDonald's Corp

MSI - Motorola Solutions

SHAW - Shaw Group

V - Visa Inc.

YUM - Yum,! Brands


Dropped Watch List Entries

ATVI has been removed.



New Watch List Candidates:


Archer-Daniels-Midland Company - ADM - close: 29.82

Company Info

ADM is in the consumer goods sector and more specifically in the agriculture and farm products industry. Shares have been slowly chewing their way higher. The last several days have seen ADM break through resistance near $29.50 and its simple and exponential 200-dma. Now the stock will soon be challenging resistance in the $30.50-31.00 zone. ADM might be able to break out higher on a strong earnings report. The company is due to report on January 31st. The announcement comes out before the opening bell. Analysts are expecting 77 cents a share.

I am suggesting we open small bullish positions if ADM can close over $31.00. We'll use a stop loss at $28.40. Our long-term target is $37.75.

Breakout trigger: Wait for ADM to close over $31.00 and then buy calls the next day with a stop loss at $28.40.

BUY the 2013 JAN $35 CALL (ADM1319A35)

FYI: 2014 calls are also available.

Chart of ADM:

Originally listed on the Watch List: 01/28/12


Las Vegas Sands - LVS - close: 49.52

Company Info

This casino and gambling stock has been stuck in a $35-50 trading range for over a year. Now LVS is on the verge of a breakout past major resistance near $50.00. That could happen if the company delivers good news when they report earnings on Feb. 1st. The earnings announcement comes out after the closing bell. Wall Street is expecting a profit of 56 cents a share.

I am suggesting we wait for LVS to close over $51.25 and then buy calls the next day with a stop loss at $47.45. Our long-term target is $69.00. Coincidentally the P&F chart is bullish with a $69 target.

Breakout trigger: Wait for LVS to close over $51.25 and then buy calls the next day with a stop loss at $47.45.

BUY the 2013 Jan $60 call (LVS1319A60)

Chart of LVS:

Originally listed on the Watch List: 01/28/12


Marvell Technology - MRVL - close: 15.79

Company Info

Shares of this semiconductor stock have been stuck under resistance near the $16.00 area for almost a year. Now MRVL is on the verge of a breakout. I am suggesting we wait for MRVL to close over $16.50 and then buy calls the next day with a stop loss at $15.20. Our target is $21.75.

FYI: The Point & Figure chart is bullish with a $21 target. Meanwhile MRVL is due to report earnings on Feb. 23rd.

Breakout trigger: Wait for MRVL to close over $16.50 and then buy calls the next day with a stop loss at $15.20.

BUY the 2013 Jan $17.50 call (MRVL1319A17.5)

Chart of MRVL:

Originally listed on the Watch List: 01/28/12


Rowan Companies - RDC - close: 35.12

Company Info

RDC is in the energy sector. The company provides drilling services. This past month has seen RDC breakout past a multi-month trend line of resistance. Yet the rally has stalled near $35 and its simple 200-dma. This high this past week was $36.25.

I am suggesting we wait for RDC to close over $36.50 and then buy calls the next day with a stop loss at $33.45. Our long-term target is $44.50.

FYI: RDC is due to report earnings on Feb. 28th.

Breakout trigger: Wait for RDC to close over $36.50 and then buy calls the next day with a stop loss at $33.45.

BUY the 2013 Jan $40 call (RDC1319A40)

FYI: 2014 calls are also available.

Chart of RDC:

Originally listed on the Watch List: 01/28/12


Active Watch List Candidates:



Activition/Blizzard, Inc. - ATVI - close: 12.15

Comments:
01/28/12 update: I have run out of patience with ATVI. The market's major indices hit new relative highs this past week but ATVI is not participating. We are removing ATVI from the watch list. Our trade never opened.

Readers may want to keep an eye on this stock. The company will report earnings on Feb. 9th.

Wait for a close over $12.75 (stop 11.90)

Our trade did not open.

01/28/12 removed from the watch list.

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


iShares China 25 Index ETF - FXI - close: 39.60

Comments:
01/28/12 update: The FXI has continued to drift higher. Shares are nearing what should be resistance near $40.00. The plan is to wait and buy calls only when the FXI has closed above $40.25. More conservative investors may want to wait for a close over $40.50 instead.

Earlier Comments:
After three years of trying to cool off its economy it looks like China has succeeded. This past week the government reported Q4 GDP growth at 8.9%, the slowest pace in ten quarters. Last month the People's Bank of China (PBOC) cut their reserve ratio requirement for banks and many analysts believe they are about to do it again. Cutting the ratio lower provides banks with more cash to loan out. China has already told banks to increase lending in the first quarter. It seems that China has engineered their soft landing, in spite of stories about ghost cities fueled by their need to build to keep workers busy. If the Chinese government starts stoking their economic fire again then their stock market should also heat up.

The FXI China ETF is on the verge of a breakout above resistance in the $39-40 area. You could also argue that the FXI has created an inverse head-and-shoulders pattern and if the neckline is broken (near $39) then it forecasts a bullish target to $49.

Our target is $49.50.

Breakout trigger: Wait for a Close over $40.25, then buy LEAPS the next day. Stop loss at $35.75.

BUY the 2013 Jan $45 call (FXI1319A45)

Originally listed on the Watch List: 01/21/12


McDonald's Corp. - MCD - close: 98.69

Comments:
01/28/12 update: MCD reported earnings on Jan. 24th that beat estimates by 3 cents. The revenue numbers also edged past analyst expectations. Management remains bullish on same-store sales growth. Yet investors sold the news. MCD is back under the $100 level and looks poised to test and break the simple 50-dma.

I am leaving our buy-the-dip trigger at $95.50. More conservative investors may want to wait for MCD to hit the rising 100-dma (approaching $94) before considering new positions. 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


Motorola Solutions, Inc. - MSI - close: 45.80

Comments:
01/28/12 update: MSI reported earnings on Jan. 25th and beat estimates by five cents. Yet management issued bearish guidance for the first quarter. Shares of MSI plunged from the $48 area toward $44.50 and technical support at its simple 200-dma. Since then MSI has managed to bounce. I'm not ready to give up quiet yet. We'll give MSI another week. If the bounce rolls over or stalls then we'll drop this stock from the watch list.

Currently our plan is to open bullish positions when MSI closes over $48.25 with a stop loss at $43.99.

Our long-term target is $64.50. 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)

01/28/12 MSI underperformed as investors sold the stock following its earnings report. If MSI doesn't improve this week we'll drop it as a candidate.

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


Shaw Group Inc. - SHAW - close: 28.08

Comments:
01/28/12 update: SHAW is still hovering near its six-month highs. The stock has found support in the $27.00-27.50 zone. We still don't want to chase it here. We are waiting for a dip back to $25.00 with a stop loss at $22.35. If we do not see SHAW pull back this week we'll re-evaluate and potentially drop it from the watch list.

If triggered 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 (small positions)

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: 101.05

Comments:
01/28/12 update: Shares of Visa are still bouncing around the $100 level. Nothing has changed for us. We're still waiting for a pull back toward the $95.00 area. More conservative traders may want to wait for a dip closer to the rising 150-dma instead as your entry point. Keep in mind that Visa has earnings coming out on February 8th and the stock could definitely see some post earnings volatility either direction.

Our long-term target is $119.00.

NOTE: Rival MasterCard (MA) reports earnings on February 2nd.

Buy-the-Dip trigger: $95.50, with a stop loss @ 89.40

BUY the 2013 Jan $110 call (V1319A110)

01/21/12 adjusted buy-the-dip trigger down to $95.50, stop 89.40
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: 62.85

Comments:
01/28/12 update: YUM is up seven out of the last nine weeks. Shares remain overbought and due for some profit taking. I suspect that profit taking will occur after YUM reports earnings on Feb. 6th.

The plan is to buy a dip at $57.50 with a stop loss at $53.75. Our long-term target is $69.00.

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