New Watch List Entries

DANG - DangDang Inc.

RIG - Transocean Ltd.

SCHW - Charles Schwab

WSM - Williams-Sonoma Inc.


Active Watch List Candidates

ATVI - Activision Blizzard

AIG - American Intl. Group

AXP - American Express

CI - Cigna Corp.

CREE - Cree, Inc.

GLD - Gold ETF

HAS - Hasbro

LTD - Limited Brands

MCD - McDonald's Corp

MSFT - Microsoft Corp.

PFE - Pfizer Inc.

URBN - Urban Outfitters

WMT - Wal-Mart Stores


Dropped Watch List Entries



New Watch List Candidates:


DangDang Inc. - DANG - close: 8.17

Company Info

E-commerce China DangDang Inc. is a Chinese Internet company similar to Amazon.com. Shares have been trending lower as investors reacted to news that the company's CFO announced his resignation for personal reasons. This correction looks overdone and represents a buying opportunity. However, I want to see some follow through on the bounce that began this past week.

Keep in mind that DANG is a volatile stock. I do consider this an aggressive trade. Readers will want to consider keeping position size small to limit risk. Another reason to be cautious is DANG's earnings report is coming up in a couple of weeks (date not yet confirmed).

I am suggesting we wait for DANG to close over $9.25 and then buy call LEAPS the next day with a wide stop loss at $7.25. Our long-term target is $14.50.

Breakout trigger: close over $9.25, stop $7.25

BUY the 2013 Jan $10 call (DANG1319A10)

Chart of DANG:

Weekly Chart of DANG:

Originally listed on the Watch List: 04/28/12


Transocean Ltd. - RIG - close: 49.80

Company Info

The oil service sector appears to have formed a bottom over the last couple of weeks. We see a similar pattern in RIG. You could argue that RIG is forming the right shoulder to a very large, inverse H&S pattern built over the last year.

I am suggesting that we wait for RIG to close over $53.00 and then buy calls the next day. I do see potential short-term resistance at $55.00, and there is clear resistance at $60.00, but our long-term target is the $65-70 zone. Investors should note that RIG is due to report earnings on May 2nd, after the closing bell. Readers may not want to open positions until after we see how the market reacts to their earnings news first.

Breakout trigger: wait for close over $53.00, stop loss at $47.25

BUY the 2013 Jan $60 call (RIG1319A60)

- or -

BUY the 2014 Jan $60 call (RIG1419A60)

Chart of RIG:

Originally listed on the Watch List: 04/28/12


Charles Schwab Corp. - SCHW - close: 14.32

Company Info

SCHW is a nationwide brokerage firm. The stock built a significant bottom last year. The recent correction from the Q1 rally has found support near $13.50 and its exponential 200-dma. Now shares are starting to rebound again. This past week has created a bullish engulfing candlestick pattern on the weekly chart.

I am suggesting we wait for SCHW to close above $14.75 and then launch positions the next morning with a stop loss at $13.35. Our long-term target is the $17.50-19.50 zone.

Breakout trigger: Wait for a close over $14.75, stop 13.35

BUY the 2013 Jan $15 call (SCHW1319A15)

- or -

BUY the 2014 Jan $20 call (SCHW1418A20)

Chart of SCHW:

Originally listed on the Watch List: 04/28/12


Williams-Sonoma Inc. - WSM - close: 39.50

Company Info

Shares of this specialty retailer have been consolidating under resistance at the $40.00 level for several months. You'll also notice on the weekly chart that shares have developed a bullish trend of higher lows. Thus we should see WSM breakout past resistance soon as this consolidation narrows. If WSM does rally past $40.00 it would create a new quadruple top breakout buy signal on the Point & Figure chart.

I am suggesting we wait for WSM to close over $40.25 and then buy calls the next day. We'll start with a stop loss at $36.90. FYI: Investors should note that WSM is due to report earnings in a couple of weeks but the May 17th date is not yet confirmed.

Breakout trigger: Wait for close over $40.25, stop 36.90

BUY the 2013 Jan $45 call (WSM1319A45)

Chart of WSM:

Originally listed on the Watch List: 04/28/12


Active Watch List Candidates:



American Intl. Group - AIG - close: 34.46

Comments:
04/28/12 update: AIG has performed better than expected. The stock broke out past resistance in the $33.00-33.50 zone and closed at new multi-month highs. Shares certainly look bullish here but I would not launch positions prior to earnings, which are coming up on May 3rd. There is always a chance the stock spikes lower on earnings news. However, we will adjust our buy-the-dip trigger from $29.00 to $30.00 and move the stop loss to $27.40. Our long-term target is $39.00.

Buy-the-Dip trigger: $30.00, stop $27.40

(Small Positions)

BUY the 2013 Jan $35 call (AIG1319A35)

- or -

BUY the 2014 Jan $35 call (AIG1418A35)

04/28/12 adjust buy-the-dip trigger to $30.00 and stop to $27.40

Originally listed on the Watch List: 04/07/12


Activision Blizzard, Inc. - ATVI - close: 12.83

Comments:
04/28/12 update: ATVI has bounced back toward resistance near $13.00. I am anticipating a breakout soon. The company should start seeing more press with its new Diablo 3 game launching soon. Plus, its World of Warcraft franchise has a new expansion coming out later this year.

I am suggesting we wait for ATVI to close over $13.25. We will buy calls the next day with a stop loss at $12.25. Our long-term target is the $16-18 range.

FYI: ATVI is due to report earnings on May 9th.

Breakout trigger: Wait for ATVI to close over $13.25, buy calls the next day with a stop at $12.25

BUY the 2013 Jan $15 call (ATVI1319A15)

- or -

BUY the 2014 Jan $15 call (ATVI1418A15)

Originally listed on the Watch List: 03/24/12


American Express - AXP - close: 60.17

Comments:
04/28/12 update: Strength in the financial sector has helped fuel bullish breakouts in both AIG and AXP. I hesitate to chase the rally in AXP. We will adjust our buy-the-dip trigger from $52.50 to $57.50 and move our stop loss higher to $53.40. However, I consider this a more aggressive entry point and we want to start with small positions to limit our risk. I have adjusted our strike prices.

I am suggesting small bullish positions if AXP dips to $57.50. We'll use a stop loss at $53.40. Our long-term target is $64.00.

Buy-the-Dip trigger: $57.50 (stop $53.40) (small positions)

BUY the 2013 Jan $60 call (AXP1319A60)

- or -

BUY the 2014 Jan $65 call (AXP1418A65)

04/28/12 adjust buy-the-dip trigger to $57.50, stop to $53.40, adjusted strike prices.

Originally listed on the Watch List: 04/14/12


Cigna Corp. - CI - close: 46.87

Comments:
04/28/12 update: A disappointing earnings report from rival Aetna (AET) on Thursday sparked a sell-off across the healthcare sector. CI will be reporting earnings this week on May 3rd. I suggesting we continue to wait for a breakout past resistance near $50.00.

I am suggesting we open bullish positions when CI closes above $50.25. We'll buy calls the next day with a stop loss at $46.40.

There is some long-term resistance near $57.00 but we'll set our target at $64.00. Currently the P&F chart is forecasting at $60 target.

Breakout trigger: Close over $50.25, stop loss 46.40

BUY the 2013 $55 call (CI1319A55)

- or -

BUY the 2014 $55 call (CI1418A55)

Originally listed on the Watch List: 04/21/12


Cree, Inc. - CREE - close: 30.97

Comments:
04/28/12 update: Hmm.... CREE spent the week churning sideways while volume faded lower and lower. I suspect we're going to see CREE breakout one way or the other soon. Shares are currently right in the middle of its $28-33 trading range.

I am suggesting we launch small bullish positions if CREE can close over $34.50. We'll buy calls the next morning with a stop loss at $29.45. Our long-term target is $44.50.

Breakout trigger: a close over $34.50 (small positions)

BUY the 2013 Jan $40 call (CREE1319A40)

Originally listed on the Watch List: 04/14/12


Gold ETF - GLD - close: 161.38

Comments:
04/28/12 update: The GLD managed a bounce off technical support at its rising 300-dma. Thus the long-term trend of higher lows is still intact. Plus, the large, inverse head-and-shoulders pattern is still working. I suspect that April is the low for the "right shoulder" of this pattern. However, instead of jumping in early we will stick to our original plan and wait for a close above resistance.

FYI: Aggressive traders might want to consider bearish trades if we see the GLD close under $155.

Earlier Comments:
Currently I am suggesting we wait for the GLD to close over $165.50 and we'll buy calls the next morning with a stop loss at $154.90. This is an aggressive entry point since the inverse H&S pattern would not be complete until shares breakout past the $175 area. The U.S. dollar is likely to see a lot of movement over the next several months, which could cause volatility in gold. Therefore we want to keep our position size small. Our long-term target is $195.

Breakout trigger: A close over $165.50 (small positions)

BUY the 2013 Jan $190 call (GLD1319A190)

- or -

BUY the 2014 Jan $190 call (GLD1418A190)

Originally listed on the Watch List: 04/14/12


Hasbro Inc. - HAS - close: 36.68

Comments:
04/28/12 update: HAS reported earnings on the 23rd. The company missed both the revenue and earnings estimates. This news sparked a sell-off to new relative lows under $34.00. Yet HAS has managed to bounce back sharply. I don't see any changes from my earlier comments.

Earlier Comments:
I am suggesting we launch bullish positions when HAS closes above $39.25. More aggressive traders might want to jump in early when HAS closes over $38.00 instead. Our long-term target is $44.75.

HAS does not move very fast so we'll need to be patient.

Breakout trigger: wait for a close over $39.25, stop 36.25

BUY the 2013 Jan $40 call (HAS1319A40)

- or -

buy the 2014 Jan $45 call (HAS1418A45)

Originally listed on the Watch List: 04/07/12


JPMorgan Chase & Co - JPM - close: 43.34

Comments:
04/28/12 update: JPM managed to rebound off its Monday morning lows near the rising 50-dma. Yet the stock is still trading with a four-week bearish trend of lower highs and lower lows. A close over $44 or $45 might signal a change in trend. However, for the moment, we will continue to wait for a correction toward support.

I am suggesting we buy calls on a dip at $40.25 with a stop loss at $37.25. Our long-term target is $49.75.

Buy-the-Dip trigger: $40.25, stop loss 37.25

BUY the 2013 Jan $45 call (JPM1319A45)

- or -

BUY the 2014 Jan $45 call (JPM1418A45)

Originally listed on the Watch List: 04/07/12


Limited Brands, Inc. - LTD - close: 50.96

Comments:
04/28/12 update: Aggressive traders may want to buy calls on LTD now. The stock has continued to show strength and this past week has produced a bullish breakout past resistance near $50.00 to close at new record highs. Personally, I am unwilling to chase it with LTD's earnings report coming up in a couple of weeks. I will adjust our buy-the-dip entry point from $44.00 to $45.50 and move our stop loss up to $41.50. We will re-evaluate our entry point following the earnings report.

Buy-the-Dip trigger: $45.50 (stop loss @ 41.50)

BUY the 2013 Jan $45 call (LTD1319A45)

04/28/12 adjust entry point to buy a dip at $45.50, stop $41.50
03/24/12 adjusted buy-the-dip trigger to $44.00 with a stop at $39.75

Originally listed on the Watch List: 03/10/12


McDonald's Corp. - MCD - close: 97.38

Comments:
04/28/12 update: Hmm... we need to make some decisions here. MCD has bounced two weeks in a row on dips near $94.15. That means we're still sitting on the sidelines with our buy-the-dip trigger at $94.00. Do we leave our trigger here at $94.00 or do we make an adjustment? Currently MCD has a bearish three-month trend of lower highs and lower lows (this is inside the much larger, longer-term up trend higher). If you think MCD will make a new lower low then consider moving your buy-the-dip trigger into the $92.50-90.00 zone. Alternatively you could look for MCD to break the trend of lower highs with a close over $98.50 and then launch bullish positions. I suspect that we will see MCD dip toward the $95 area again so we will adjust the newsletter's buy-the-dip trigger to $95.00 and leave our stop loss at $88.50 for now. If triggered our long-term target is $109.00.

Buy-the-Dip trigger: $95.00, stop 88.50

BUY the 2013 Jan $100 call (MCD1319A100)

- or - BUY the 2014 Jan $105 call (MCD1418A105)

04/28/12 adjust the buy-the-dip trigger to $95.00
04/14/12 adjust buy-the-dip trigger to $94.00.

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


Microsoft - MSFT - close: 31.98

Comments:
04/28/12 update: MSFT spent the week consolidating gains from the prior week's earnings-inspired surge higher. Currently shares remain under resistance at the $33.00 level. Readers might want to consider buying calls on a close above $33.00. I have not given up yet on a buy-the-dip strategy but we will adjust our buy-the-dip entry point to $29.50 and move our stop loss up to $26.75.

Buy-the-Dip trigger: $29.50 (stop @ $26.75)

BUY the 2013 Jan $30 call (MSFT1319A30)

- or -

BUY the 2014 Jan $30 call (MSFT1418A30)

04/28/12 adjust buy-the-dip trigger to $29.50, stop to $26.75

Originally listed on the Watch List: 04/14/12


Pfizer Inc. - PFE - close: 23.08

Comments:
04/28/12 update: Attention! I am making an adjustment to our entry strategy. PFE has rallied to new multi-year highs but has not yet closed above our trigger at $23.20. The company is due to report earnings on Tuesday morning, May 1st. We do not want to open positions prior to the earnings report. We will wait and see how the stock reacts to earnings. If shares close above $23.20 after it reports earnings, then we'll launch positions.

Our long-term target is $28.00. I will list the 2013 calls but I prefer the 2014 because PFE does not move very fast.

Breakout trigger: Wait for a close over $23.20, use a stop at $20.65

BUY the 2013 Jan $22.50 call (PFE1319A22.5)

- or -

BUY the 2014 Jan $25 call (PFE1418A25)

04/28/12 do not launch positions prior to the earnings report on May 1st.

Originally listed on the Watch List: 04/21/12


Urban Outfitters Inc. - URBN - close: 29.21

Comments:
04/28/12 update: Traders bought the dip at URBN's 100-dma this past week. The bounce has pushed shares past all of its key moving averages. If this rebound continues we should see URBN testing resistance at $30.00 soon. Our plan is to wait for URBN to close above $30.50 and then buy call LEAPS the next day.

If the stock can breakout it could see a short squeeze with the most recent data listing short interest at more than 10% of the float. I am suggesting a trigger to launch small bullish positions when URBN closes over $30.50. We'll use a stop at $27.75. Our long-term target is $35.75.

Breakout trigger: Wait for URBN to close over $30.50 (stop 27.75)

BUY the 2013 Jan $35 call (URBN1319A35)

04/07/12 URBN broke out above resistance at $30.00 this past week but it has yet to close over our trigger at $30.50.

Originally listed on the Watch List: 03/31/12


Wal-Mart Stores - WMT - close: 59.03

Comments:
04/28/12 update: It looks like the bribery story had a bigger impact than previously thought. Shares of WMT plunged on Monday, Tuesday, and Wednesday but have since pared their losses. The $60 level and the 50-dma and 100-dma are all now overhead resistance. I'm not giving up just yet. We'll give WMT a couple of more weeks and re-evaluate. I want to wait to see how the market reacts to its earnings report on May 17th. Our plan remains unchanged.

I am suggesting we wait and buy calls when WMT closes over $64.00. We'll use a stop loss at $56.95 to start. Our long-term target is the $74.75 mark although we may adjust it higher. Currently the Point & Figure chart is forecasting a $91 target.

WMT does not move very fast so we'll need patience. I am listing the 2013 calls but I prefer the 2014 calls instead.

Breakout trigger: Wait for a close over $64.00, stop @ 56.95

BUY the 2013 Jan $65 call (WMT1319A65)

- or -

BUY the 2014 Jan $65 call (WMT1418A65)

Originally listed on the Watch List: 04/21/12