New Watch List Entries

DIS - Walt Disney Co.

FDO - Family Dollar Stores

TJX - TJX Companies


Active Watch List Candidates

AMRN - Amarin Corp.

DFS - Discover Financial

HNZ - H.J. Heinz Co.

JPM - JPMorgan Chase

MRK - Merck & Co

PEP - Pepsico Inc.

PFE - Pfizer Inc.

QCOM - QUALCOMM Inc.

SBUX - Starbucks Corp.

USB - U.S. Bancorp

WMT - Wal-Mart Stores


Dropped Watch List Entries

None.



New Watch List Candidates:


Walt Disney Co. - DIS - close: $47.09

Company Info

DIS is a media giant from movies, television networks, and its theme parks. The stock has been showing relative strength and is currently trading at all-time record highs. The $44.00 level was major resistance and should now be new support.

I am suggesting we buy call LEAPS on a dip at $45.00 with a stop loss at $41.75. Our long-term target is $54.50.

Buy-the-Dip trigger: $45.00 (stop 41.75)

BUY the 2014 Jan $50 call (DIS1418A50)

Chart of DIS:

Originally listed on the Watch List: 06/16/12


Family Dollar Stores - FDO - close: 73.26

Company Info

FDO operates a chain of discount retail stores. The stock has been showing relative strength. The $70.00 level was major resistance and FDO broke out past this level a couple of days ago. $70 should now be support.

I am suggesting we wait and buy calls on a dip at $70.25 with a stop loss at $65.75. Our long-term target is $84.50.

Note: FDO is due to report earnings on June 28th. More conservative traders will want to wait and see how the market reacts to FDO's earnings before initiating positions.

FYI: FDO's point and figure chart is bullish with a $102 target.

(FDO does have 2014 options available but the spreads are way too wide)

Buy-the-Dip trigger: $70.25 (stop 65.75)

BUY the 2013 $80 call (FDO1319A80) current ask $4.50

Chart of FDO:

Originally listed on the Watch List: 06/16/12


The TJX Companies - TJX - close: 42.46

Company Info

TJX operates a number of apparel and home fashion stores. The last couple of months have seen the stock digesting its prior gains in a sideways consolidation. TJX has resistance at the $43.00 level and the consolidation is narrowing suggesting shares are about to break out higher.

I am suggesting we wait for TJX to close above $43.25 and then buy calls the next morning with a stop loss at $39.75. Our long-term target is $49.75.

Breakout trigger: wait for a close over $43.25 (stop 39.75)

BUY the 2013 Jan $45 call (TJX1319A45) current ask $2.35

- or -

BUY the 2014 Jan $45 call (TJX1418A45) current ask $4.70

Chart of TJX:

Originally listed on the Watch List: 06/16/12


Active Watch List Candidates:



Amarin Corp. - AMRN - close: 11.84

Comments:
06/16/12 update: It was a quiet week for AMRN. Shares traded sideways under the $12.00 level. Actually this is disappointing since both the DRG drug index and BTK biotech index are both rising. Overall I don't see any changes from last week's comments.

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 !

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


Discover Financial - DFS - close: 32.99

Comments:
06/16/12 update: We may have to adjust our entry point for DFS soon. If the Greek vote does not crash the financials then we'll wait for DFS to report earnings on June 19th (before the opening bell). If DFS doesn't correct on its earnings report then we'll re-evaluate our entry point strategy. A close above $34.50 might be an alternative entry point.

Currently, 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)

06/16/12 DFS is scheduled to report earnings on June 19th.

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


H.J. Heinz Co. - HNZ - close: 54.55

Comments:
06/16/12 update: HNZ has been making progress with a strong four-day rally this past week. We still want to see shares breakout past resistance.

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: 35.03

Comments:
06/16/12 update: We may have to adjust our entry point strategy on JPM as well. This could be a volatile week for the financial sector. The Greek vote on Sunday and the aftermath of its results could push financial stocks either direction. If the market interprets the Greek vote positively then we'll reconsider our strategy.

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: 38.94

Comments:
06/16/12 update: MRK has been showing improvement. Both the drug and biotech sectors have been rising. MRK is nearing the top of its $37-39.50 trading range. We want to be patient and wait for the bullish breakout.

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: 69.48

Comments:
06/16/12 update: PEP continues to rally following its test of support two weeks ago. Shares appear to have closed at new 52-week highs on Friday. Aggressive traders could launch positions 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: 22.61

Comments:
06/16/12 update: PFE has been showing strength this past week with a breakout past resistance at its five-week trend line of lower highs. PFE has also rallied past its 50-dma. I don't see any changes from my prior comments.

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


QUALCOMM Inc. - QCOM - close: 56.50

Comments:
06/16/12 update: Disappointing earnings guidance from Nokia (NOK), one of the largest mobile phone makers in the world, weighed on shares of QCOM. That's because QCOM makes a high-margin chipset in some of NOK's phones. If NOK's sales are slowing then that should mean less demand for chips from QCOM.

Shares of QCOM are churning in the $55-60 range. 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)

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


Starbucks Corp. - SBUX - close: 52.54

Comments:
06/16/12 update: SBUX underperformed this past week with shares hitting new relative lows on Wednesday. We have been expecting a dip toward round-number support at $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. 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: 31.58

Comments:
06/16/12 update: USB has produced a dramatic reversal higher following its dip toward the 200-ema, just two weeks ago. Now the stock is back above resistance at its 50-dma. If the financials do not sink on the Greek vote this Sunday then we'll re-evaluate our entry point strategy on USB next week.

Currently, 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: 67.75

Comments:
06/16/12 update: It looks like the rally in WMT may be losing steam. Shares have been churning sideways the last few days. We do not want to chase it here but if WMT does not start to correct lower soon then I'll drop it as a candidate. I want to give WMT one more week to start correcting lower. If not, we'll drop it.

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