New Watch List Entries

CLX - The Clorox Co.

CVS - CVS Caremark Corp.

MON - Monsanto Co.


Active Watch List Candidates

CAT - Caterpillar Inc.

DIS - Walt Disney Co.

JPM - JPMorgan Chase

PFE - Pfizer Inc.

SYK - Stryker Corp

UNP - Union Pacific Corp

USB - U.S. Bancorp


Dropped Watch List Entries

SHLD was removed from the watch list.



New Watch List Candidates:


The Clorox Co. - CLX - close: 73.08

Company Info

CLX is a large consumer goods company. Shares managed to consolidate sideways while the market dropped in recent days. The longer-term trends look bullish. The point & figure chart is bullish with an $87.00 target.

There is short-term resistance near $73.50 and then longer-term resistance near $75.00. I am suggesting we wait for CLX to close over $75.50 and then buy calls the next day.

FYI: CLX has a strong 3.5% dividend yield. The next dividend payment is August 9th with the stock trading ex-dividend on July 23rd, 2012. It should be about 64 cents.

NOTE: CLX is due to report earnings on Aug. 2nd.

Breakout trigger: Wait for a close over $75.50 (stop 71.75)

BUY the 2013 Jan $75 call (CLX1319A75) current ask $1.95

- or -

BUY the 2014 Jan $80 call (CLX1418A80) current ask $2.35

Chart of CLX:

Originally listed on the Watch List: 07/14/12


CVS Caremark Corp. - CVS - close: 48.05

Company Info

CVS runs a national drugstore chain. The stock recently broke out past major resistance near $46.00. Now shares are sitting near record highs. The P&F chart is very bullish with a long-term target of $81.00.

I am suggesting we wait for CVS to close over $48.50 and then buy calls the next day with a stop loss at $44.40. Our long-term target is $57.50 for the 2014 calls.

FYI: CVS is due to report earnings on Aug. 7th.

Breakout trigger: Wait for a close over $48.50 (stop 44.40)

BUY the 2013 Jan $50 call (CVS1319A50) current ask $1.75

- or -

BUY the 2014 Jan $55 call (CVS1418A55) current ask $2.36

Chart of CVS:

Originally listed on the Watch List: 07/14/12


Monsanto Co. - MON - close: 83.86

Company Info

MON is in the agricultural chemicals industry. The stock has been stair-stepping higher and held up very well during the market's recent swoon. Now shares are testing resistance in the $84-85 area.

I am suggesting readers wait for a close over $85.25 and then buy calls the next day. The point & figure chart has a bullish $104 target. We will aim for $99.50.

Breakout trigger: Wait for a close over $85.25 (stop 79.75)

BUY the 2013 Jan $90 call (MON1319A90) current ask $3.60

- or -

BUY the 2014 Jan $100 call (MON1418a100) current ask $5.60

Chart of MON:

Originally listed on the Watch List: 07/14/12


Active Watch List Candidates:



Caterpillar Inc. - CAT - close: 82.07

Comments:
07/14/12 update: It was not a good week for CAT. Shares continue to sink under a bearish trend of lower highs and lower lows. The company is due to report earnings on July 25th. I would hesitate to launch positions until after we see how the market reacts to earnings.

Currently the plan is to wait for CAT to close over $90.50 and buy calls the next day. I would be tempted to adjust that to waiting for CAT to close over its simple 50-dma but for now we are leaving the entry strategy unchanged.

Our long-term target is the $110-115 zone (although we'll exit the 2013 calls before CAT hits our final target).

Breakout trigger: Close over $90.50, stop loss @ 84.75

BUY the 2013 Jan $95 call (CAT1319A95)

- or -

BUY the 2014 Jan $100 call (CAT1418A100)

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


Walt Disney Co. - DIS - close: $48.19

Comments:
07/14/12 update: DIS continues to hold up well with traders buying the stock near its trend line of higher lows. I am still reluctant to chase it here even though the trend is bullish. The company is due to report earnings on August 7th.

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: 36.07

Comments:
07/14/12 update: Hmm... so what do we do with JPM now? Earnings were much better than anticipated. Wall Street was looking for 75 cents a share and JPM delivered $1.21. Details put losses on the "whale trade" at $5.8 billion (thus far) which seemed to soothe investors worries (it could have been worse). The stock rallied on its earnings news with a +5.9% pop and a breakout above its 50-dma.

We have been waiting for a dip toward $30 but suddenly that seems less likely to happen. JPM does have resistance in the $37-38 zone. I could see waiting for JPM to close over $38.00 and then buy calls. However, we will put this watch list candidate on hold for a week and see if there is any follow through on Friday's rally.

We're keeping JPM as a candidate but we're temporarily removing any entry point strategy. This week we will just wait and watch and re-evaluate an entry point next weekend.

I would prefer the 2014 calls but more aggressive traders could use the 2013 calls instead.

No entry point this week!

Just wait and watch!

We will re-evaluate an entry next weekend.

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


Pfizer Inc. - PFE - close: 22.81

Comments:
07/14/12 update: PFE held up reasonably well this past week but the stock is still lagging some of its drug sector peers. We're still waiting for a breakout higher. Currently we want to wait for PFE to close above $23.40 and then buy calls the next day.

PFE is due to report earnings on July 31st.

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


Starbucks Corp. - SBUX - close: 53.61

Comments:
07/14/12 update: SBUX held support near the $51.50 level in spite of the market's six-day slide. Now the bounce has pushed SBUX above short-term resistance near $53.00. Aggressive traders may want to go ahead and buy calls now and just use a stop loss just under $51.00. I am suggesting the rest of us go ahead and wait for SBUX to breakout through the top of its trading range near $56.00.

Wait for a close over $56.25 and then buy calls the next day with a stop loss at $50.75. Our long-term target is $69.00.

FYI: Earnings are July 26th.

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


Sears Holding Corp. - SHLD - close: 53.58

Comments:
07/14/12 update: Sears failed to participate in the market's oversold bounce on Friday. That doesn't bode well for this stock.

I am giving up on SHLD and removing it from the watch list.

Our trade did not open.

07/14/12 SHLD is not cooperating.

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


Stryker Corp. - SYK - close: 53.05

Comments:
07/14/12 update: SYK spent most of the week churning on either side of the $53 level and its 50-dma. The company is due to report earnings on July 18th and the results should help propel the stock one way or the other.

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)

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


Union Pacific Corp. - UNP - close: 118.15

Comments:
07/14/12 update: UNP is holding up well. The stock managed a gain for the week. Shares ar trading in a range between support (prior resistance near $116) and resistance near $120. 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).

FYI: UNP is due to report earnings on July 19th.

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)

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


U.S. Bancorp - USB - close: 32.01

Comments:
07/14/12 update: I am adjusting our entry point strategy. USB held up very well this past week with a sideways consolidation instead of following the market lower. Friday saw USB gain +2.1% to close at new multi-week highs. There is some resistance at $33.00. I am suggesting we buy calls if USB can close over $33.50 and we'll use a stop loss at $29.90. However, I have one condition. We will not open positions prior to the earnings report on July 18th. Our long-term target is $39.50.

I have adjusted our option strikes.

Buy-the-breakout: Wait for a close over $33.50 (stop loss 29.90)

BUY the 2013 Jan $35 call (USB1319A35)

- or -

BUY the 2014 Jan $35 call (USB1418A35)

07/14/12 adjusted strategy: wait for a close over $33.50, stop 29.90
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