New Watch List Entries

HAL - Halliburton

PEP - Pepsico Inc.


Active Watch List Candidates

ATVI - Activision Blizzard

ECA - Encana Corp.

HNZ - H.J. Heinz Co.

JPM - JPMorgan Chase

MRK - Merck & Co

MSFT - Microsoft Corp.

PFE - Pfizer Inc.

SBUX - Starbucks Corp.

USB - U.S. Bancorp


Dropped Watch List Entries

CREE was removed.



New Watch List Candidates:


Halliburton Co. - HAL - close: 31.37

Company Info

This is a PUT trade

HAL is an oil services company that is almost 100 years old. Unfortunately for current shareholders both the stock and the OSX oil services index are in a bearish trend of lower highs and lower lows. Shares of HAL have fallen to key support near $30.00 and a long-term trend line of higher lows that dates back to 2009. If HAL breaks this trend line it could signal a much deeper correction to come.

I am suggesting we buy put options on HAL if the stock closes under $29.50. If triggered we'll use a stop loss at $32.55. Our initial long-term target will be $21.50. Currently the Point & Figure chart is bearish with a $24 target.

Breakdown trigger: Wait for a close under $29.50, buy PUTs the next day, stop loss at $32.55

BUY the 2013 Jan $25 PUT (HAL1319M25) current ask $1.79

- or -

BUY the 2014 Jan $25 PUT (HAL1418M25) current ask $3.75

Chart of HAL:

Originally listed on the Watch List: 05/26/12


Pepsico, Inc. - PEP - close: 68.64

Company Info

Coca-cola's long-term archenemy is Pepsi. Both stocks have been showing relative strength in recent months. Shares of PEP broke through resistance near $67.00 a couple of weeks ago. Aggressive traders could buy calls now. I am suggesting we wait for PEP to close above $70.25. We'll buy calls the next day with a stop loss at $65.75. Our long-term target is $79.00. FYI: The Point & Figure chart is currently forecasting an $80 target.

Breakout trigger: Wait for a close over $70.25, stop loss @ 65.75

BUY the 2014 Jan $75 call (PEP1418A75) current ask $2.54

Chart of PEP:

Originally listed on the Watch List: 05/26/12


Active Watch List Candidates:



Activision Blizzard, Inc. - ATVI - close: 12.24

Comments:
05/26/12 update: ATVI is still holding near support at the bottom of its range near $12.00 so we are not giving up yet. We will have to be patient. Currently we are waiting for a breakout over resistance near $13.00.

If ATVI closes under $11.90 we'll probably drop it as a candidate.

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.

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


Cree, Inc. - CREE - close: 26.11

Comments:
05/26/12 update: A terrible plunge in the semiconductor sector has helped fuel a big sell-off in CREE. Shares have broken down below several layers of support. Our plan was to buy calls on a close over $34.50. That's unlikely to happen any time soon. We are dropping CREE as a candidate.

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

Trade did not open.

05/26/12 removed CREE from the watch list.

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


Encana Corp. - ECA - close: 20.50

Comments:
05/26/12 update: ECA is holding up reasonably well with a short-term bullish trend of higher lows. We still need to be patient and wait for the breakout.

I am suggesting we wait for ECA to close over $22.50. We'll buy calls the next day with a stop loss at $18.75. Our long-term targets is 29.00 (although we'll probably exit the 2013 calls before ECA hits $29).

Breakout trigger: close over $22.50, stop loss @ 18.75

BUY the 2013 Jan $25 call (ECA1319A25)

- or -

BUY the 2014 Jan $25 call (ECA1418A25)

Originally listed on the Watch List: 05/12/12


H.J. Heinz Co. - HNZ - close: 53.50

Comments:
05/26/12 update: The correction lower in HNZ stopped at technical support near $52.50 and its simple 200-dma on Thursday. Aggressive traders could buy calls now with a tight stop (maybe near $52.00). However, I am suggesting we wait for HNZ to close over $55.50 and then buy calls the next day with a stop loss at $51.85 (just under the April low). Our long-term target is $64.00.

Breakout trigger: close over $55.50, stop loss @ 51.85

BUY the 2013 Jan $55 call (HNZ1319A55)

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BUY the 2014 Jan $60 call (HNZ1418A60)

Originally listed on the Watch List: 05/12/12


JPMorgan Chase - JPM - close: 33.50

Comments:
05/26/12 update: The oversold bounce in JPM seems to be losing steam. Shares could be poised to continue the correction lower. I am suggesting we take advantage of investors worry and confusion over JPM's risk and liabilities and buy calls on a dip at $30.25. We'll use a stop loss at $27.75. I would prefer the 2014 calls but more aggressive traders could use the 2013 calls instead.

Buy-the-Dip trigger: $30.25 (stop loss @ 27.75)

BUY the 2013 Jan $33 call (JPM1319a33)

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BUY the 2014 Jan $35 call (JPM1418A35)

Originally listed on the Watch List: 05/19/12


Merck & Co - MRK - close: 37.55

Comments:
05/26/12 update: MRK lost about -1% for the week. If this stock doesn't show some improvement soon we'll probably drop it as a bullish candidate.

Currently we are waiting to launch positions until MRK can close over $40.00 and then buy calls the next day. Our long-term target is $47.50. FYI: The Point & Figure chart has a long-term target of $60.00.

Breakout trigger: Wait for close over $40.00, stop loss @ 37.75

BUY the 2014 Jan $40 call (MRK1418A40)

Originally listed on the Watch List: 05/05/12


Microsoft - MSFT - close: 29.06

Comments:
05/26/12 update: MSFT almost hit our buy-the-dip entry point at $28.50 on Wednesday but shares bounced at $28.64. The intermediate trend is still down so odds are good we will see MSFT hit our entry point soon. More conservative traders may want to wait for a dip near $28.00 instead or even wait for MSFT to close above its simple 10-dma as an alternative entry point.

If we are triggered at $28.50 we'll start with a stop loss at $26.45.

Buy-the-Dip trigger: $28.50 (stop @ $26.45)

BUY the 2013 Jan $30 call (MSFT1319A30)

- or -

BUY the 2014 Jan $30 call (MSFT1418A30)

05/19/12 adjust the trigger to $28.50, stop to $26.45
05/05/12 adjust the trigger to $29.00
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: 22.13

Comments:
05/26/12 update: PFE lost about 40 cents for the week. The close under its 50-dma is bearish and on a short-term basis the stock looks poised to correct lower. I suspect we could see PFE dip toward $21.00 or its 200-dma.

At the moment we are leaving our strategy unchanged with plans to buy calls when PFE closes above $23.20 (and then launch positions the next morning). 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)

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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


Starbucks Corp. - SBUX - close: 54.56

Comments:
05/26/12 update: SBUX saw a big oversold bounce this past week but you'll notice the bounce reversed at technical resistance at the 50-dma. I am still expecting a dip toward $50.00.

I am suggesting we buy calls if SBUX trades down to $50.25. The $50.00 level should be round-number support. We'll use a stop loss at $47.00. Our long-term target is $64.00.

Buy-the-Dip trigger: $50.25 (stop loss @ 45.75)

BUY the 2013 Jan $55 call (SBUX1319A55)

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BUY the 2014 Jan $60 call (SBUX1418A60)

05/19/12 adjust stop loss to $45.75

Originally listed on the Watch List: 05/05/12


U.S. Bancorp - USB - close: 30.93

Comments:
05/26/12 update: USB did produce a gain for the week but the rally has stalled under new resistance near $31.40 (and its 50-dma). Our strategy remains unchanged.

I am expecting more weakness in the financials but we can use this to our advantage. USB should find support near the $28.00 level. I am suggesting a trigger to buy calls at $28.25. We'll use a stop loss at $25.90. Our long-term target is $34.00. I prefer the 2014 calls but we'll list the 2013s as well.

Buy-the-Dip trigger: $28.25 (stop loss 25.90)

BUY the 2013 Jan $30 call (USB1319A30)

- or -

BUY the 2014 Jan $30 call (USB1418A30)

Originally listed on the Watch List: 05/19/12