New Watch List Entries

ADI - Analog Devices Inc.

CVX - Chevron Corp.

HON - Honeywell Intl.


Active Watch List Candidates

KO - The Coca-Cola Co.

URBN - Urban Outfitters

VMC - Vulcan Materials Co


Dropped Watch List Entries

C, GLD, and JNPR all graduated to the active play list.

HFC was removed.



New Watch List Candidates:


Analog Devices - ADI - close: 42.19

Company Info

ADI is in the semiconductor sector. The stock has slowly been chewing its way through resistance in the $41-42 area. ADI managed to hit new 2012 highs this past week. The recent action would suggest ADI is poised to begin the next leg higher but I want to see a little more confirmation.

I am suggesting we wait for ADI to close above $42.80 and then buy calls the next day. If triggered we'll use a stop loss at $39.80 to start. Our long-term target is $49.75. FYI: The Point & Figure chart is bullish with a $49 target.

Breakout trigger: Wait for a close above $42.80 (stop: 39.80)

BUY the 2014 Jan $45 call (ADI1418a45) current ask $2.55

Chart of ADI:

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


Chevron Corp. - CVX - close: 109.71

Company Info

CVX was hitting new all-time, record highs back in September. Then shares saw a painful correct back toward round-number support near $100 and its trend of higher lows (see chart). Since then this energy giant has rebounded and is now pushing through almost all of its major moving averages. The next hurdle for CVX is resistance in the $110-111 area and its 100-dma.

The high this past week was $111.11. I am suggesting we wait for CVX to close above $111.50 and then buy calls the next day with a stop loss at $104.75. Our long-term target is $124.50.

Breakout trigger: Wait for a close above $111.50 (stop: 104.75)

BUY the 2014 Jan $120 call (CVX1418a120) current ask $3.50

Chart of CVX:

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


Honeywell Intl. - HON - close: 64.21

Company Info

HON is in the industrial goods sector. The stock has been showing relative strength and rallied to new 2012 highs this past week. The stock's recent breakout past resistance near $62 was a bullish buy signal. Readers may want to buy calls now. However, I am suggesting we wait for a dip. There is a risk that HON does not pull back and our trade does not open. As an alternative you could wait for a close above $65.00 as your entry point.

The newsletter is suggesting investors buy calls on a dip at $62.50. If triggered we'll use a stop loss at $58.40. Our long-term target is $74.50. FYI: The Point & Figure chart is bullish with a long-term $86 target.

Buy-the-Dip trigger: $62.50 (stop 58.40)

BUY the 2014 Jan $65 call (HON1418a65) current ask $5.15

Chart of HON:

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


Active Watch List Candidates:



HollyFrontier - HFC - close: 47.09

Comments:
12/22/12: HFC is still showing relative strength with the stock hitting new all-time highs this past week. I am seriously tempted to consider bullish positions here. However, given the uncertainty around how the fiscal cliff issue is going to play out and add to that how HFC is relatively close to a trend line of resistance, I would rather wait.

It is unlikely that HFC will hit our buy-the-dip trigger at $43.00 any time soon so we are removing HFC from the watch list and putting it back on our radar screen.

Trade did not open.

12/22/12 removed from the watch list. Put it back on our radar screen
12/15/12 adjust buy-the-dip trigger to $43.00, stop to 39.75

Originally listed on the Watch List: 12/02/12


The Coca-Cola Company - KO - close: 36.89

Comments:
12/22/12: KO was hit with some selling pressure this past week. The stock seems to be churning inside the $36-38 range. If we see KO close under $36.00 we'll drop it as a candidate. Meanwhile, I am suggesting we wait for KO to close above $38.25 and then buy calls the next day. If triggered our long-term target is $44.00.

Breakout trigger: wait for a close over $38.25 (stop 35.75)

BUY the 2014 $40 call (KO1418a40)

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


Urban Outfitters - URBN - close: 39.43

Comments:
12/22/12: URBN came close but did not meet our entry point requirement to launch positions. The stock hit $40.66 on Wednesday and closed at $40.42 on Thursday but that wasn't good enough. Now with the pullback on Friday this is starting to look like a bearish double top to compliment the peak from September.

Overall I don't see any changes from my prior comments. I am suggesting we wait for URBN to close above $40.75 and then buy calls the next day. If triggered our long-term target is $48.00.

Breakout trigger: Wait for a close above $40.75, (stop @ 37.85)

buy the 2014 Jan $45 call (URBN1418a45)

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


Vulcan Materials Co. - VMC - close: 52.26

Comments:
12/22/12: VMC continues to churn sideways. Right now we are looking for a dip to $50.00 but readers may want to consider an alternative entry point with a close above resistance near $54.00 instead.

Earlier Comments:
I am suggesting we open bullish positions on a dip at $50.25. If triggered we'll use a stop loss at $46.40. Our long-term target is $64.00 although I would expect some resistance at $60.00. FYI: The Point & Figure chart is bullish and is forecasting at $70 target.

Buy-the-Dip trigger: $50.25 (stop loss 46.40)

BUY the 2014 Jan $55 call (VMC1418a55)

Originally listed on the Watch List: 12/02/12