New Watch List Entries

SYK - Stryker Corp

UNP - Union Pacific Corp

V - Visa Inc.


Active Watch List Candidates

DFS - Discover Financial

DIS - Walt Disney Co.

JPM - JPMorgan Chase

PFE - Pfizer Inc.

SBUX - Starbucks Corp.

USB - U.S. Bancorp

VLO - Valero Energy


Dropped Watch List Entries

ABT, AMRN, and PEP all graduated to the play list.

I have removed QCOM and WMT as a candidate.



New Watch List Candidates:


Stryker Corp. - SYK - close: 55.10

Company Info

SYK is a medical technology company. Thursday's decision by the Supreme Court on healthcare didn't seem to have much impact on SYK. The stock has been consolidating under resistance near $56.00 for months. It finally looks like shares are ready to breakout.

I am suggesting we wait for SYK to close over $56.50 and then buy calls the next day with a stop loss at $50.75. We will set our targets at $64.50 and $69.50.

Breakout trigger: Wait for close over $56.50 (stop 50.75)

BUY the 2013 Jan $60 call (SYK1319A60)

- or -

BUY the 2014 Jan $60 call (SYK1418A60)

Chart of SYK:

Originally listed on the Watch List: 06/30/12


Union Pacific Corp. - UNP - close: 119.31

Company Info

Shares of UNP are looking pretty strong when you consider the U.S. economy seems to be slowing down. Normally a slowing economy would be bearish for a transport (railroad) company like UNP. Yet shares of UNP have broken out from a major trading range and now they're testing their record highs.

I am suggesting we wait for UNP to close over $121.00 and then buy calls the next day. We will start with a stop loss at $111.75. Our long-term target is $139 (although we'll probably exit our 2013 calls way before UNP hits our target).

Breakout trigger: Wait for a close over $121 (stop loss 111.75)

BUY the 2013 Jan $130 call (UNP1319A130)

- or -

BUY the 2014 Jan $140 call (UNP1418A140)

Chart of UNP:

Originally listed on the Watch List: 06/30/12


Visa, Inc. - V - close: 123.63

Company Info

Shares of Visa have rallied toward their all-time highs. A breakout past resistance near $125.00 could signal the beginning of its next leg higher. The Point & Figure chart is bullish with a $150 target.

I am suggesting we wait for Visa to close over $125.50 and then buy calls the next day with a stop loss at $117.45. Our long-term target is $149.00 (although we'll likely exit our 2013 calls before V reaches our target).

Breakout trigger: $xx

BUY the 2013 Jan $135 call (V1319A135)

- or -

BUY the 2014 Jan $140 call (V1418A140)

Chart of V:

Originally listed on the Watch List: 06/30/12


Active Watch List Candidates:



Abbott Labs - ABT - close: 64.47

ABT hit our entry point requirements on Friday. I've moved it to the current plays section of the newsletter.

Originally listed on the Watch List: 06/23/12


Discover Financial - DFS - close: 34.58

Comments:
06/30/12 update: DFS might be in play soon. Traders bought the dip on Thursday and DFS has rallied back toward its highs. The stock is poised to breakout to new all-time highs soon.

We currently have an entry point strategy to buy calls if DFS can close over $35.00 (buy calls the next day).

Breakout trigger: close above $35.00, stop 31.75

buy the 2013 Jan $37 call (DFS1319a37)
- or -
buy the 2014 Jan $40 call (DFS1418a40)

06/30/12 removed the buy-the-dip trigger.
06/23/12 adjusted entry point strategy to two different entries
06/16/12 DFS is scheduled to report earnings on June 19th.

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


Walt Disney Co. - DIS - close: $48.50

Comments:
06/30/12 update: DIS continues to rally and broke out past resistance near $48.00 on Friday. The stock is at new record highs. We're still not willing to chase it just yet.

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)

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


JPMorgan Chase - JPM - close: 35.73

Comments:
06/30/12 update: JPM has been churning sideways between $37.00 and $34.50 the last two weeks. If the stock breaks down from this range I would expect a dip to the $30-28 zone. If it breaks higher then shares will likely challenge round-number resistance at $40.00. Since the situation in Europe remains unsolved I'm still expecting further weakness in some of the financials.

Given the rumors surrounding JPM's potential losses this quarter the stock could also see some volatility surrounding its earnings report in July.

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


Pepsico, Inc. - PEP - close: 70.66

PEP met our entry point requirement on Friday. I've moved it to the active trade, play updates section.

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


Pfizer Inc. - PFE - close: 23.00

Comments:
06/30/12 update: Shares of PFE seem to be lagging the rally in some of its peers but the stock is trading near multi-year highs. PFE ended the week right at resistance near $23.00. The April high was $23.30. I am adjusting our entry point strategy. We will wait for PFE to close over $23.40 and then buy calls the next day. We'll up the stop loss to $20.95.

Our long-term target is $28.00.

Breakout trigger: Wait for a close over $23.40, use a stop at $20.95

BUY the 2014 Jan $25 call (PFE1418A25)

06/23/12 removed the 2013 call. We'll only play the 2014s
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: 55.68

Comments:
06/30/12 update: QCOM is virtually flat for the week with a four-cent gain. The stock's three-month bearish trend of lower highs and lower lows remains in effect.

I am removing QCOM from the watch list but we'll reconsider the stock as a potential trader if shares can close over the $60.00 level.

Our trade did not open.

06/30/12 removed QCOM from the watch list
06/23/12 adjust entry requirement to a close over $60.00 (instead of $62.00), if QCOM closes under $55.00 we'll drop it as a candidate.

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


Starbucks Corp. - SBUX - close: 53.32

Comments:
06/30/12 update: I am adjusting our strategy on SBUX.

The stock has been churning sideways in the $51-56 zone for almost two months. Shares just bounced off the bottom of the range and more aggressive traders might want to buy this bounce with a tight stop near $51.00. I suspect that if SBUX breaks down from this trading range that it will see a drop toward $45.00. On the other hand if SBUX can breakout from this range it should reaffirm the long-term up trend.

I am suggesting we wait for SBUX to close above $56.25 and then buy calls the next day with a stop loss at $50.75. Our long-term target is $69.00.

I have adjusted our option strike prices.

Breakout Trigger: wait for a close over $56.25, stop loss 50.75

BUY the 2013 Jan $60 call (SBUX1319A60)

- or -

BUY the 2014 Jan $65 call (SBUX1418A65)

06/30/12 adjust strategy to wait for a close over $56.25, new stop @ 50.75, adjust option strikes.
05/19/12 adjust stop loss to $45.75

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


U.S. Bancorp - USB - close: 32.16

Comments:
06/30/12 update: Hmm... we may have to reconsider our strategy on USB. The stock has been holding up pretty well. Now USB is close to breaking out to new multi-year highs.

Tonight we're going to leave our strategy unchanged with a buy-the-dip plan to buy calls at $29.00. However, readers may want to consider buying calls if USB can close over the $33.00 mark instead (and adjust your stop loss and target appropriately).

Buy-the-Dip trigger: $29.00 (stop loss 26.40)

BUY the 2013 Jan $30 call (USB1319A30)

- or -

BUY the 2014 Jan $30 call (USB1418A30)

06/30/12 readers might want to consider an alternative entry point
06/23/12 adjust entry trigger to $29.00, stop to 26.40
06/02/12 adjust entry trigger to $28.00

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


Valero Energy - VLO - close: 24.15

Comments:
06/30/12 update: VLO has been making progress. This past week saw VLO rally past potential resistance at its 200-dma, 150-dma, 300-dma, and 100-dma. Now VLO is flirting with a breakout past resistance near $24.00.

I am adjusting our entry strategy. Instead of $24.25 we will wait for VLO to close above $24.50 and then buy calls the next day (stop loss 22.45). Our long-term target is $29.75.

Breakout trigger: Wait for a close over $24.50 (stop 22.45)

BUY the 2013 Jan $25 call (VLO1319A25)

- or -

BUY the 2014 Jan $30 call (VLO1418A30)

06/30/12 adjust entry strategy: wait for close over $24.50, stop 22.45

Originally listed on the Watch List: 06/23/12


Wal-Mart Stores - WMT - close: 69.72

Comments:
06/30/12 update: WMT continues to show relative strength. After churning sideways for three weeks the stock is now breaking out to new multi-year highs. Short-term traders might want to consider bullish positions here. With our long-term time frame I do not want to chase WMT here. Yet it's unlikely that shares will hit our buy-the-dip trigger at $63.00 any time soon so we are removing WMT as a candidate.

Our trade did not open.

06/30/12 removed WMT from the watch list
06/23/12 adjust trigger to $63.00, from $62.00

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