Editor's Note:

We had three watch list candidates jump to the play list. It looks like CVX and WFC are about to meet our entry point requirements and could be new plays soon.



New Watch List Entries

AMED - Amedisys Inc.

CCL - Carnival Corp.

OMX - OfficeMax


Active Watch List Candidates

CVX - Chevron Corp.

GLD - Gold ETF

ROST - Ross Stores

UIS - Unisys Corp.

WFC - Wells Fargo

WMT - Wal-Mart Stores


Dropped Watch List Entries

EMN, SCHW, SPRD all graduated to the play list.



New Watch List Candidates:


Amedisys Inc. - AMED - close: 15.84

Company Info

AMED provides home healthcare and hospice services. The stock has spent months building a base in the $10-15 zone. More recently the consolidation narrow into the $14-15 zone. The recent breakout looks bullish. I'd rather buy calls on a dip.

I am suggesting we wait and buy calls on a dip at $15.05. We'll use a stop loss at $13.45. Our target is $19.50. Please note that AMED does have the January 2013 calls but I am suggesting the March 2013 calls instead.

Buy-the-Dip trigger: $15.05 *Small Positions* (stop 13.45)

BUY the 2013 Mar $15 call (AMED1316c15) current ask $2.83

Chart of AMED:

Originally listed on the Watch List: 09/08/12


Carnival Corp. - CCL - close: 37.05

Company Info

CCL operates several cruise lines, notably the Carnival Cruise line brand. After spending months and months churning sideways it looks like all the bad news about a slowing global economy has been priced in because shares are breaking out. CCL has seen a big two-day move so we don't want to chase it here.

I am suggesting we wait and buy calls on a dip at $35.50 with a stop loss at $32.75. Our long-term target is $42.00. FYI: The point and figure chart is bullish with a $48 target.

NOTE: Readers may also want to check out shares of RCL, which have a similar pattern.

Buy-the-Dip trigger: $35.50 (stop loss @ 32.75) *Small Positions*

BUY the 2014 Jan $40 call (CCL1418a40) current ask $3.70

Chart of CCL:

Originally listed on the Watch List: 09/08/12


OfficeMax Inc. - OMX - close: 6.57

Company Info

Shares of this specialty retailer appear to be rising out of limbo. The stock has been basing in the $4.00-6.00 zone for over a year. The recent breakout looks like a new buy signal. However, after a several-day run we don't want to chase it.

I am suggesting we wait and buy a dip at $6.05 with a stop loss at $5.45. Our long-term target is $9.50.

Buy-the-Dip trigger: $6.05 (stop 5.45) *Small Positions*

BUY the 2014 Jan $7 call (OMX1418a7) current ask $1.55

Chart of OMX:

Originally listed on the Watch List: 09/08/12


Active Watch List Candidates:



Chevron Corp. - CVX - close: 114.00

Comments:
09/08/12 update: It looks like CVX will soon be a new play. The market's rally has lifted CVX to a new high, right to $114.00. Yet not over $114.00. Our plan says wait for CVX to close over $114.00 and then buy calls the next day. Aggressive traders could go ahead and jump in. We will wait.

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)

09/07/12 CVX closed at $114.00. Wait for a close over $114.00.
Current bid/ask on our option is $5.75/5.90.

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


SPDR Gold ETF - GLD - close: 168.44

Comments:
09/08/12 update: The potential for both QE and stimulus from both the U.S. and Europe is sending gold higher. The GLD did not see the pullback we were hoping for. Instead the ETF has continued to march higher. I still don't want to chase it. However, we will raise our buy-the-dip trigger from $162.00 to $164.00.

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: $164.00 (stop loss @ 154.40)

BUY the 2013 Jan $175 call (GLD1319a175)

- or -

BUY the 2014 Jan $200 call (GLD1418a200)

09/08/12 adjust the buy-the-dip trigger to $164.00 (up from $162)

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


Ross Stores, Inc. - ROST - close: 68.13

Comments:
09/08/12 update: ROST may not survive another week on our watch list. Not only did shares fail to rally with the market but ROST is actually showing relative weakness. The long-term trend is still up but ROST looks poised to break technical support at the rising 50-dma.

If ROST doesn't improve soon we'll drop it. 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


Unisys Corp. - UIS - close: 22.37

Comments:
09/08/12 update: The market's widespread gains have helped lift UIS toward its mid August highs but quite past its August highs. I am willing to wait for a pull back toward likely support at $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: 35.00

Comments:
09/08/12 update: WFC could soon be a new trade for us. Financials rallied sharply last week. WFC traded to $35.19 intraday on Friday but settled at $35.00. Our plan says to wait for WFC to close above $35.00 and then buy calls the next day with a stop loss at $32.75. Obviously more aggressive traders could jump in now.

Our starting target is $39.85. 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


Wal-Mart Stores - WMT - close: 73.82

Comments:
09/08/12 update: The market's broad-based gains have lifted WMT back toward its recent resistance near $75.00. You'll notice that WMT shot lower on Friday. I am not willing to chase it here. I told readers that this was probably too early to put WMT on our watch list since we're waiting for a significant correction lower.

If WMT can close over $75.00 we'll re-evaluate our plan.

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)

- or -

BUY the 2014 Jan $70 call (WMT1418a70)

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