New Watch List Entries

CVX - Chevron Corp.

GLD - Gold ETF

WMT - Wal-Mart Stores


Active Watch List Candidates

EMN - Eastman Chemical

ROST - Ross Stores

SCHW - Charles Schwab

SPRD - Spreadtrum Communications

UIS - Unisys Corp.

WFC - Wells Fargo


Dropped Watch List Entries

SWKS graduated to the play list.

I am pruning ATI and BBY off the list.



New Watch List Candidates:


Chevron Corp. - CVX - close: 112.16

Company Info

CVX is a major oil and gas company. The stock broke out to new all-time highs above the $110-111 area a few weeks ago. Since then it has consolidated sideways in the $110-114 range. The breakout past $110 is significant. Aggressive traders may want to go ahead and buy calls now.

I am suggesting we wait for CVX to close over $114.00 and then we'll buy calls the next day with a stop loss at $108.75. Our long-term target is $129.00.

Breakout trigger: Wait for a close over $114.00 (stop 108.75)

BUY the 2014 Jan $125 call (CVX1418a125) current ask $5.85

Chart of CVX:

Originally listed on the Watch List: 09/01/12


SPDR Gold ETF - GLD - close: 164.22

Company Info

The GLD is a popular exchange traded fund (ETF) that moves with the price of gold bullion. If you doing any reading in the financial blogosphere the whole world seems to be talking about the sideways consolidation in gold (a.k.a. the GLD) and the impending breakout. Well the breakout just happened. With another traders following this ETF it could be a self-fulfilling prophesy.

It's not all about technicals, which happen to look bullish with the breakout past resistance at $160, at the 200-dma, and the trend line of lower highs. It's also about Ben Bernanke's speech and his comments that the Federal Reserve "will provide" new stimulus. Now we don't know when or how the Fed will launch any new QE but money printing should fundamentally drive gold prices higher.

Aggressive traders could buy calls now. I think the GLD will see a dip so I am suggesting we buy calls on a dip at $162.00. More conservative traders may want to wait for a dip closer to $160 instead. We will use a stop loss at $154.40.

NOTE: I am listing the 2013 calls even though they only have a few months left. We will aim to exit these when the GLD hits $174.00. Our target on the 2014 calls is the $185-200 range.

Buy-the-Dip trigger: $162.00

BUY the 2013 Jan $175 call (GLD1319a175) current ask $3.95

- or -

BUY the 2014 Jan $200 call (GLD1418a200) current ask $8.50

Chart of GLD:

Originally listed on the Watch List: 09/01/12


Wal-Mart Stores - WMT - close: 72.60

Company Info

The retailing titan Walmart is both the largest retailers in the world and the largest private employer in the world (2.2 million employees). After years of being dead money shares of WMT started climbing in late 2011. There was a choppy sideways consolidation in the first half of 2012 and then - boom - the stock exploded higher.

WMT is currently digesting its Q2-Q3 gains with a correction lower. On a short-term basis the stock is trying to hold the 50-dma. I suspect the correction continues. I might be early listing WMT as a watch list candidate but we want to be ready when shares do see a pullback.

I am suggesting we buy calls on WMT when the stock dips to $68.00. We'll start with a stop loss at $63.45. I am listing the 2013 calls but would prefer the 2014s. Our target to exit the 2013 calls is at $74.75. Our target to exit the 2014 calls is when WMT hits $84.00. FYI: The Point & Figure chart is currently bullish with a long-term $106 target.

Buy-the-Dip trigger: $68.00

BUY the 2013 Jan $70 call (WMT1319a70) current ask $4.50

- or -

BUY the 2014 Jan $70 call (WMT1418a70) current ask $7.45

Chart of WMT:

Originally listed on the Watch List: 09/01/12


Active Watch List Candidates:



Allegheny Technologies - ATI - close: 29.64

Comments:
09/01/12 update: Shares of ATI are underperforming. The breakout reversed at its 100-dma several days ago. Now ATI is headed for its 2012 lows near $27.65. I am giving up on ATI as a candidate. A close under $27.50 might be considered a bearish entry point for short-term trades.

Trade did not open.

09/01/12 removed from the watch list. trade did not open.

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


Best Buy Co. - BBY - close: 17.74

Comments:
09/01/12 update: We added BBY last week as a bearish candidate to buy puts, betting on the long-term decline in the stock and the company's market share. I warned readers that our biggest risk was probably a buyout offer to take the company private. That risk remains. The number of call options has exploded as traders speculate on some sort of buyout down the road. There has been some analyst discussion about BBY suggesting a buyout is possible but unlikely.

I am suggesting we drop BBY as a candidate. If we owned puts there would be a constant worry that BBY might gap open higher on news and stop us out for a loss. As of now our trade has not opened yet.

trade did not open.

09/01/12 removed from the watch list. trade did not open.

Originally listed on the Watch List: 08/25/12


Eastman Chemical Co. - EMN - close: 55.26

Comments:
09/01/12 update: EMN closed virtually unchanged for the week as the stock churns sideways. I don't see any changes from my prior comments.

Earlier Comments:
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 $55-56 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)

- or -

BUY the 2014 Jan $65 call (EMN1418A65)

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


Ross Stores, Inc. - ROST - close: 69.19

Comments:
09/01/12 update: It looks like the back-to-school shopping season has been a strong one for retailers like ROST. The company just reported its August same-store sales this past week. Analysts were expecting +5.8% growth but ROST announced +8.0% same-store sales. Surprisingly shares didn't move much on this news and continued to churn sideways just under round-number resistance at the $70.00 level. ROST is currently forecasting same-store sales for September to rise +2%-3% and a +3%-4% in October.

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)

- or -

BUY the 2014 Jan $80 call (ROST1418A80)

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


Charles Schwab Corp. - SCHW - close: 13.49

Comments:
09/01/12 update: SCHW has been showing some relative strength. The stock has managed a slow three-week climb and now SCHW is testing resistance near $13.50.

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)

- or -

BUY the 2014 Jan $15 call (SCHW1418A15)

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


Spreadtrum Communications - SPRD - close: 19.76

Comments:
09/01/12 update: SPRD spent the week drifting higher. I don't see any changes from my prior comments. Shares are currently chewing through overhead supply near resistance at $20.00.

I am suggesting a trigger to buy calls when SPRD closes above $20.50. We will aim for $24.00 since I'm only listing the 2013 calls. SPRD does have 2014s but the spreads are too wide.

Breakout trigger: Wait for a close over $20.50 (stop: 18.90)

BUY the 2013 Jan $22.50 call (SPRD1319a22.5)

Originally listed on the Watch List: 08/25/12


Unisys Corp. - UIS - close: 21.13

Comments:
09/01/12 update: UIS only lost three cents for the week. I am still expecting a dip toward $20.00.

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)

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


Wells Fargo & Co - WFC - close: 34.03

Comments:
09/01/12 update: Shares of WFC appear to be hibernating. The stock closed virtually unchanged for the week. 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