New Watch List Entries

EMN - Eastman Chemical

ROST - Ross Stores

SCHW - Charles Schwab

UIS - Unisys Corp.

URBN - Urban Outfitters


Active Watch List Candidates

ATI - Allegheny Tech.

SWKS - Skyworks Solutions

WFC - Wells Fargo


Dropped Watch List Entries

LEN and HFC have graduated to the active play list.

I have removed CLX and HCP as candidates.



New Watch List Candidates:


Eastman Chemical Co. - EMN - close: 55.71

Company Info

EMN is a major chemical company. Normally you might that with a slowing global economy and rising oil prices (a major input cost for chemicals) that shares of EMN would be suffering. This stock is actually setting new all-time record highs. The $55 level has been major resistance for years.

I am suggesting readers wait for EMN to close over $56.00 and then buy calls the next day with a stop loss at $52.40. Our long-term target is to exit our 2014 calls when EMN hits $69.00.

Breakout trigger: Wait for EMN to close over $56.00, buy calls the next day (stop loss 52.40)

BUY the 2013 Jan $60 call (EMN1319A60) current ask $2.35

- or -

BUY the 2014 Jan $65 call (EMN1418A65) current ask $4.90

Chart of EMN:

Originally listed on the Watch List: 08/18/12


Ross Stores, Inc. - ROST - close: 69.47

Company Info

ROST is a discount and off-price apparel chain. Investors seem to love this stock. The company just reported earnings this past week. ROST beat by a penny but guided lower. That's right. Management lowered guidance and yet shares did not see a sell-off. Instead the stock is bouncing off rising technical support at the 50-dma and is poised to breakout past resistance at $70.00 soon.

If investors are willing to ignore bad news then we want to take a look. The bullish trend of higher lows would suggest a breakout past $70 soon. I am suggesting we wait for ROST to close over $70.50 and then buy calls the next day with a stop loss at $66.45. Our long-term target is $84.50. FYI: The P&F chart is bullish with a $92 target.

We do want to limit our position size and keep them small to reduce our risk.

Breakout trigger: Wait for a close over $70.50 (stop: 66.45)

*Small Positions*

BUY the 2013 Jan $75 call (ROST1319A75) current ask $2.10

- or -

BUY the 2014 Jan $80 call (ROST1418A80) current ask $4.80

Chart of ROST:

Originally listed on the Watch List: 08/18/12


Charles Schwab Corp. - SCHW - close: 13.20

Company Info

Shares of this financial services company appear to have found a bottom. Now they are starting to breakout from a multi-week consolidation. I want to see a little more confirmation. I am suggesting investors wait for SCHW to close over $13.60 and then buy calls the next day. We will start with a stop loss at $12.45. Our long-term target is $15.50 (exit the 2014 calls when SCHW hits $15.50).

Breakout trigger: Wait for SCHW to close over $13.60

BUY the 2013 Jan $12.50 call (SCHW1319A12.5) current ask $1.45

- or -

BUY the 2014 Jan $15 call (SCHW1418A15) current ask $1.30

Chart of SCHW:

Originally listed on the Watch List: 08/18/12


Unisys Corp. - UIS - close: 21.00

Company Info

UIS is an I.T. services company. Big picture the stock bottomed back in June. On a short-term basis the bullish breakout past $20.00 looks pretty good but the rally stalled right at short-term resistance near $21.00.

I am suggesting we buy calls on a dip at $20.25. We'll use a stop loss at $18.75. Our target is $24.50. I am only suggesting the 2013 calls because the spread on the 2014 calls is too wide.

Buy-the-Dip trigger: $20.25 (stop 18.75)

BUY the 2013 Jan $20 call (UIS1319A20) current ask $1.75

Chart of UIS:

Originally listed on the Watch List: 08/18/12


Urban Outfitters - URBN - close: 31.40

Company Info

Shares of this "lifestyle" and apparel retailer have spent the last four weeks consolidating sharp mid-July rally. Now URBN looks like it's on the verge of another breakout higher. I am suggesting we wait for URBN to close over $32.00 and buy calls the next day with a stop loss at $29.90. Our target is only $35.00. Traders should be aware that the $33.75-34.00 area has been resistance in the past.

Instead of listing the 2014 calls, which only has some odd strikes for URBN, I'm including the March 2013s in addition to the January 2013s.

FYI: The Point & Figure chart is bullish with a long-term target of $46.

NOTE: Tuesday could be volatile as investors react to URBN's earnings report due out Monday night. Wall Street estimates are for 33 cents a share.

Breakout trigger: Wait for a close over $32.00 (stop loss: 29.90)

BUY the 2013 Jan $35 call (URBN1319A35) current ask $1.35

- or -

BUY 2013 MARCH $35 call (URBN1316C35) current ask $1.95

Chart of URBN:

Originally listed on the Watch List: 08/18/12


Active Watch List Candidates:



Allegheny Technologies - ATI - close: 32.41

Comments:
08/18/12 update: ATI is still consolidating sideways under short-term resistance at the $33.00 level. I don't see any changes from my prior comments on August 11th. It looks like all the bad news about the global economy has been priced in. Now the stock is on the verge of breaking out from this $28-33 trading range.

I do consider this an aggressive, higher-risk trade because the economic data is still negative and still suggesting a global slowdown. If this trade does open we want to keep our position size small.

I am suggesting we wait for ATI to close over $34.00 and then buy calls the next day. We'll use a wide stop loss at $29.90. Our long-term target is $the $40-45 area. FYI: The Point & Figure chart for ATI has turned bullish with a $44 target.

Breakout trigger: Wait for a close over $34.00 (stop loss 29.90)

BUY the 2013 Jan $37.50 call (ATI1319A37.5)

- or -

BUY the 2014 Jan $40.00 call (ATI1418A40)

*small positions*

Originally listed on the Watch List: 08/11/12


The Clorox Co. - CLX - close: 72.39

Comments:
08/18/12 update: Hmm... I am a little concerned that the market has been able to rally to new relative highs but CLX is not keeping up. I am removing CLX as a watch list candidate. Readers may want to keep an eye on it for a breakout past resistance near $73.50-74.00.

Our trade did not open.

08/18/12 removed CLX as a watch list candidate.

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


HCP, Inc. - HCP - close: 44.99

Comments:
08/18/12 update: We have been expecting HCP to correct lower. However, seeing HCP correct lower while the stock market is advancing to new relative highs is too much of a divergence! I am removing HCP as a watch list candidate.

Readers may want to keep HCP on their radar screen for a bounce from likely support near $42.00.

Trade did not open.

08/18/12 removed HCP as a candidate.
08/06/12 adjust trigger dip to $43.00

Originally listed on the Watch List: 07/21/12


Skyworks Solutions - SWKS - close: 29.80

Comments:
08/18/12 update: SWKS continues to coil sideways under resistance near $30.00. Shares look like they are ready to breakout higher any day now. The late July high was $30.10. I am suggesting we wait for SWKS to close over $30.25 and then buy calls the next day. We'll use a stop loss at $27.40. Our long-term target is the $34.00-37.50 range (depending which option you buy).

FYI: The point & figure chart is bullish with a $40 target.

Breakout trigger: Wait for a close over $30.25 (stop loss 27.40)

BUY the 2013 Jan $32 call (SWKS1319a32)

- or -

BUY the 2014 Jan $35 call (SWKS1418a35)

Originally listed on the Watch List: 08/11/12


Wells Fargo & Co - WFC - close: 34.03

Comments:
08/18/12 update: Financials have been churning sideways in a narrow range the last couple of weeks. Then in just the last couple of days we've seen a move higher. WFC has not broken out higher yet but shares are building a bullish trend of higher lows. Overall I don't see any changes from my prior comments.

I am suggesting we buy calls if WFC Can close over $35.00. We'll buy calls the next day. Our starting target is $39.85. We'll use a stop loss at $32.75. FYI: The point & figure chart is bullish with a $57 target.

Breakout trigger: wait for close over $35.00 (stop 32.75)

BUY the 2014 $40 call (WFC1418A40)

Originally listed on the Watch List: 08/06/12