New Watch List Entries

AMRN - Amarin Corp.

QCOM - QUALCOMM Inc.


Active Watch List Candidates

DFS - Discover Financial

HNZ - H.J. Heinz Co.

JPM - JPMorgan Chase

MRK - Merck & Co

PEP - Pepsico Inc.

PFE - Pfizer Inc.

SBUX - Starbucks Corp.

USB - U.S. Bancorp

WMT - Wal-Mart Stores


Dropped Watch List Entries

None.



New Watch List Candidates:


Amarin Corp. - AMRN - close: 11.66

Company Info

Shares of drug maker AMRN continue to improve. The stock is building on a bullish trend of higher lows against resistance near $12.75. There has been some speculation that AMRN is a takeover target, which has fueled some of the sharp rallies higher. Currently the Point & Figure chart is bullish with a $15.00 target.

I am suggesting we wait for AMRN to close above $13.00 and buy calls the next day with a stop loss at $11.40. Our long-term target is $17.50.

FYI: We want to keep our position size small. AMRN can be a volatile stock. There are 2014 options available but the spreads are too wide.

Breakout trigger: Wait for a close over $13.00, stop @ 11.40

BUY the 2013 Jan $15 call (AMRN1319A15)

! Small positions !

Chart of AMRN:

Originally listed on the Watch List: 06/09/12


QUALCOMM Inc. - QCOM - close: 58.76

Company Info

QCOM is a major manufacturer of communication components, many of them found inside your smartphone. After surging to 12-year highs in March the stock has seen a significant correction. Now it's bouncing off a long-term trend line of higher lows. If this rebound continues we want to hop on board.

I am suggesting we wait for QCOM to close above $62.00 and then buy calls the next day with a stop loss at $57.45. Our long-term target is $74.00. We will probably exit the 2013 calls prior to hitting our final target.

Breakout trigger: Wait for close over $62.00, stop 57.45

BUY the 2013 Jan $70 call (QCOM1319A70)

- or -

BUY the 2014 Jan $75 call (QCOM1418A75)

Chart of QCOM:

Originally listed on the Watch List: 06/09/12


Active Watch List Candidates:



Discover Financial - DFS - close: 32.82

Comments:
06/09/12 update: Financial stocks delivered a strong week. Yet DFS has stalled under technical resistance at its 50-dma. It almost looks like shares have paused at the top of its new bearish channel. I don't see any changes from my prior comments. The financials could be extremely weak if the Greek vote goes wrong for the Eurozone.

FYI: DFS is due to report earnings on June 19th.

I am suggesting we buy calls on a dip at $28.00 with a stop loss at $26.40. More conservative traders may want to wait for DFS to actually bounce off $28 before considering new positions first.

Buy-the-Dip trigger: $28.00

BUY the 2013 Jan $30 call (DFS1319A30)

- or -

BUY the 2014 Jan $35 call (DFS1418A35)

Originally listed on the Watch List: 06/02/12


H.J. Heinz Co. - HNZ - close: 53.59

Comments:
06/09/12 update: HNZ bounced off technical support at its rising 300-dma. Shares don't move that fast. We'll have to be patient.

We are currently waiting for HNZ to breakout to new highs. The plan is to launch positions after HNZ closes above $55.50. Our long-term target is $64.00.

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

BUY the 2013 Jan $55 call (HNZ1319A55)

- or -

BUY the 2014 Jan $60 call (HNZ1418A60)

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


JPMorgan Chase - JPM - close: 33.68

Comments:
06/09/12 update: JPM spiked down under the $31.00 level this past week before bouncing. Aggressive traders might want to buy this rebound but I would wait. If the Greeks vote for the anti-austerity party it's going to cause trouble in Europe and big banks with potential exposure overseas will sink.

Right now the plan is to buy calls when JPM dips to $30.25. More conservative traders might want to wait for a JPM to dip to $29.00 instead.

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)

- or -

BUY the 2014 Jan $35 call (JPM1418A35)

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


Merck & Co - MRK - close: 38.46

Comments:
06/09/12 update: MRK held support at $37.00 again and now shares are bouncing back toward resistance in the $39.50 area. The stock's rally past a cloud of moving averages this past week is bullish.

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


Pepsico, Inc. - PEP - close: 68.31

Comments:
06/09/12 update: PEP found support right where it should have near prior resistance at $67.00 and its rising 50-dma. Aggressive traders may want to 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)

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


Pfizer Inc. - PFE - close: 22.14

Comments:
06/09/12 update: PFE looks poised to breakout past the five-week trend of lower highs. A move past $22.50 could be used as a new bullish entry point but I am suggesting we wait for this stock to close over $23.20 (and 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. (We'll exit the 2013 calls before shares hit our target)

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


Starbucks Corp. - SBUX - close: 53.59

Comments:
06/09/12 update: SBUX has not yet broken the trend of lower highs. That would suggest the correction is not over yet.

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. More conservative traders may want to wait for a dip to $48.50 as their entry point instead.

Our long-term target is $64.00.

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

BUY the 2013 Jan $55 call (SBUX1319A55)

- or -

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: 30.10

Comments:
06/09/12 update: Financials saw a big bounce this past week. USB is testing round-number resistance at $30.00. If the rebound continues then there is resistance at the 50-dma. I remain concerned that the banking stocks could sink as the situation deteriorates in Europe.

The plan is to buy calls on a dip at $28.00 with a stop at $25.90. The $28 level should still be support for USB but readers may want to use a tighter stop loss to reduce risk. Our long-term target is $34.00. I prefer the 2014 calls but we'll list the 2013s as well.

Buy-the-Dip trigger: $28.00 (stop loss 25.90)

BUY the 2013 Jan $30 call (USB1319A30)

- or -

BUY the 2014 Jan $30 call (USB1418A30)

06/02/12 adjust entry trigger to $28.00

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


Wal-Mart Stores - WMT - close: 68.22

Comments:
06/09/12 update: For a stock with 3.38 billion shares outstanding a $2.35 move (+3.5%) is pretty big. WMT hasn't seen a move like Friday's in a very long time. After churning sideways the last several days the stock's big run on Friday has pushed it to 12-1/2 year highs.

We do not want to chase it here. If the stock continues to rally then we might drop it or adjust our entry strategy. We'll give WMT one more week and then re-evaluate.

Currently I am suggesting we buy calls on a dip at $62.00 with a stop loss at $57.90, just under the simple 200-dma. More conservative traders could use a stop loss closer to $60 instead.

Buy-the-Dip trigger: $62.00

BUY the 2013 Jan $65 call (WMT1319A65)

- or -

BUY the 2014 Jan $70 call (WMT1418A70)

Originally listed on the Watch List: 06/02/12