Editor's Note:

COF hit our entry point requirement on Friday. I have moved it to the new plays section.



New Watch List Entries

HAS - Hasbro Inc.

LLL - L-3 Communications


Active Watch List Candidates

CNX - CONSOL Energy

DE - Deere & Co.

FTR - Frontier Telecom

GE - General Electric

GLD - Gold ETF

SWN - Southwestern Energy


Dropped Watch List Entries

CCL and JPM have been removed
COF has graduated to an active trade. See its update in the new plays section.



New Watch List Candidates:


Hasbro Inc. - HAS - close: 39.05

Company Info

Would you believe that there are less than 65 days until Christmas? Analysts expect that holiday shopping will rise +4% this year. That should be good news for shares of toy and game maker Hasbro. The stock is currently consolidating below resistance at the $40.00 level.

I am suggesting we wait for HAS to close over $40.25 and open bullish positions the next day with a stop loss at $37.25. Our long-term target is $45.00.

FYI: HAS is due to report earnings on Oct. 22nd.

Breakout trigger: Wait for a close over $40.25 (stop 37.25)

BUY the 2014 Jan $40 call (HAS1418a40) current ask $3.60

Chart of HAS:

Originally listed on the Watch List: 10/20/12


L-3 Communications - LLL - close: 73.61

Company Info

LLL is a defense contractor for the U.S. government. The stock has been consolidating sideways under major resistance at $75.00 for several months. LLL looks poised to breakout soon.

I am suggesting we buy calls the day after LLL closes above $75.50. We'll use a stop loss at $72.25. Our long-term target is $85.00. The Point & Figure chart for LLL is bullish with an $85 target. FYI: LLL is scheduled to report earnings on Oct. 30th.

NOTE: We will not open positions if LLL gaps open above $76.50 or sees a one-day surge where the stock closes above $76.50. This is an effort to try to avoid any post-earnings volatility.

Breakout trigger: Wait for a close over $75.50 (stop 72.25)

BUY the 2014 Jan $80 call (1418a80) current ask $3.60

Chart of LLL:

Originally listed on the Watch List: 10/20/12


Active Watch List Candidates:



Carnival Corp. - CCL - close: 38.19

Comments:
10/20/12: The rally in CCL appears to have failed at is September high near $39. This looks like a potential bearish double top. I am removing CCL as a candidate. Shares did not hit our buy-the-dip trigger at $35.25. Readers may want to keep it on their radar screen.

Trade did not open.

10/20/12 removed from the watch list.
09/22/12 earnings are due on Sep. 25th. We are adjusting our entry trigger to $35.25 and our stop loss to $32.75
09/15/12 move the trigger to $36.00 and the stop to $33.75

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


CONSOL Energy Inc. - CNX - close: 35.21

Comments:
10/20/12: CNX has held up reasonably well. The stock posted a gain for the week. It will be interesting to see how investors react to CNX's earnings report, which is scheduled for October 25th.

I am suggesting we open small bullish positions on a dip at $33.50 with a stop loss at $29.90. Our long-term target is $42.50. The Point & Figure chart for CNX is bullish with a long-term $47 target.

Buy-the-Dip trigger: $33.50 (Small Positions, stop 29.90)

BUY the 2014 Jan $40 call (CNX1418a40)

Originally listed on the Watch List: 10/13/12


Deere & Co. - DE - close: 84.99

Comments:
10/20/12: Instead of pulling back shares of DE broke out. I discussed this in previous updates and suggested an alternative entry point to buy a breakout past $84.00. DE produced a multi-day rally and traded above $87 before pulling back on Friday. Broken resistance near the $83.50-84.00 zone should be new support.

I am adjusting our buy-the-dip trigger up to $83.50 and we'll move the stop loss to $79.45. I would start with small positions to limit our risk. I am adjusting our target to $97.50.

FYI: DE is not scheduled to report earnings until late November.

Buy-the-Dip trigger: $83.50 (stop loss 79.45) *Small Positions*

BUY the 2014 Jan $90 call (DE1418a90)

10/20/12 adjust the buy-the-dip trigger to $83.50, move the stop to $79.45, move the target to $97.50
09/29/12 adjust our entry point to buy a dip at $79.00, adjust the stop loss to $74.90

Originally listed on the Watch List: 09/15/12


Frontier Comm. - FTR - close: 4.76

Comments:
10/20/12: FTR continues to churn sideways. there is resistance near $5.00 and short-term support near the 50-dma. I suspect that FTR might continue to move sideways until the company reports earnings on November 6th.

I am suggesting we buy calls after FTR closes above $5.20. Wait for FTR to close above our trigger and buy calls the next day with a stop at $4.65. Our long-term target is $6.90. More aggressive traders could aim higher.

Breakout trigger: Wait for a close over $5.20 (stop 4.65)

BUY the 2014 Jan $5 call (FTR1418a5)

Originally listed on the Watch List: 09/29/12


General Electric - GE - close: 22.03

Comments:
10/20/12: GE reported earnings on the 19th and missed Wall Street's estimates by one cent. Revenues for the quarter were also a miss at $36.35 billion. Investors sold the news and GE lost -3.4% on Friday. We have been expecting a correction lower so it's not a surprise.

Please note that I am moving our buy-the-dip trigger down to $21.00 and moving our stop loss to $19.45. Our long-term target is $27.50.

Buy-the-Dip trigger: $21.00 (stop 19.45)

BUY the 2014 Jan $25 call (GE1418a25)

10/20/12 adjust the buy-the-dip trigger to $21.00 and our stop to $19.45

Originally listed on the Watch List: 09/22/12


SPDR Gold ETF - GLD - close: 166.97

Comments:
10/20/12: A two-day bounce in the U.S. dollar helped spark some profit taking in gold. The GLD fell to its rising 50-dma near $166. After looking at the stock market, the dollar, and gold; I suspect we could see the GLD dip further than $165. Therefore I am moving our buy-the-dip trigger down to $163.00 and moving our stop loss to $157.75.

I am also adjusting our 2013 call from Januarys to Junes.

Plan to exit the 2013 calls at $174.50. Exit the 2014 calls in the $185-200 range.

Buy-the-Dip trigger: $163.00 (stop loss @ 157.75)

BUY the 2013 Jun $175 call (GLD1322a175)

- or -

BUY the 2014 Jan $200 call (GLD1418a200)

10/20/12 adjust the buy-the-dip trigger to $163.00, stop to $157.75
adjust the 2013 call from Jan. $175 to June $175
09/15/12 adjust the trigger to $165.50, stop to $159.00.
09/08/12 adjust the buy-the-dip trigger to $164.00 (up from $162)

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


JPMorgan Chase - JPM - close: 42.32

Comments:
10/20/12: JPM has held up relatively well. It would be tempting to buy the stock's breakout past resistance near $42.00 and use this pullback to $42 as an entry point. Unfortunately the broader market looks vulnerable right now. I suspect JPM will retreat but it could be a while before it hits the $39 area. I am removing JPM as a candidate, at least for now.

Trade did not open

10/20/12 removed JPM as a candidate
10/12/12 JPM reported earnings

Originally listed on the Watch List: 09/22/12


Southwestern Energy - SWN - close: 35.25

Comments:
10/20/12: SWN did not make any progress this past week. Nimble traders might want to try and buy a dip near $34 or its 50-dma. I am suggesting we wait for SWN to close over $37.00 and then buy calls the next day with a stop loss at $33.40. Our long-term target is $44.00. The Point & Figure chart for SWN is bullish with a long-term $51 target.

FYI: SWN is due to report earnings on Nov. 1st.

Breakout trigger: Wait for a close above $37.00 (stop 33.40)

BUY the 2014 Jan $40 call (SWN1418a40)

Originally listed on the Watch List: 10/13/12