New Watch List Entries

AKAM - Akamai Tech

ANR - Alpha Nat. Res.

SOHU - Sohu.com


Active Watch List Candidates

ADI - Analog Devices Inc.

CVX - Chevron Corp.

URBN - Urban Outfitters

VMC - Vulcan Materials Co


Dropped Watch List Entries

HON graduated to the play list.
KO was removed.



New Watch List Candidates:


Akamai Technology - AKAM - close: 40.91

Company Info

I mentioned AKAM as a bullish candidate in my editor's note for the new plays section last weekend. The stock has weathered last week's market decline very well. Shares remain inside the $40-42 zone. Broken resistance at $40.00 is holding as new support. More aggressive traders may want to buy calls now.

I am worried about the market reaction to any fiscal cliff resolution or failure. Thus I'd like to see more strength. We'll wait for AKAM to close above $42.00 and then launch positions the next day with a stop at $37.75. Our target is $52.50.

Breakout trigger: Wait for a close above $42.00 (stop 37.75)

BUY the 2014 Jan $50 call (AKAM1418a50) current ask $3.35

Chart of AKAM:

Originally listed on the Watch List: 12/31/12


Alpha Natural Resources - ANR - close: 9.74

Company Info

Investors were worried that if President Obama won re-election it would be bad news for the coal industry. You can see the post-election sell-off in ANR's charts. Yet those worries seem to have vanished. The stock has recovered and is once again challenging major resistance near the $10.00 level. ANR has spent months building a bottom and looks ready to begin a new up trend.

I am suggesting we wait for ANR to close above $10.15 and then buy calls the next day. If triggered we'll use a stop loss at $8.90. Our long-term target is $18.00.

Breakout trigger: Wait for a close above $10.15 (stop 8.90)

BUY the 2014 Jan $10 call (ANR1418a10) current ask $2.25

Chart of ANR:

Originally listed on the Watch List: 12/31/12


Sohu.com - SOHU - close: 47.34

Company Info

SOHU is in the Chinese Internet industry. The Chinese market has produced a dramatic turnaround higher. The stock has held up very well in spite of news that the Chinese government has passed an Internet identity law that requires web users to register their real names. Naturally the markets were worried that this law might impact web use and commerce on the Internet. So far there doesn't seem to be any bearish reaction in SOHU's stock price.

SOHU appears to have formed a significant bullish double bottom with its low in July and November of 2012. Now the recent breakout has created a bullish buy signal on the P&F chart, which is forecasting a long-term $72 target.

I don't want to chase SOHU here. We'll wait for some profit taking. Broken resistance at $45.00 should be new support. I am suggesting we buy calls on a dip a t $45.50. Our long-term target is $58.50.

Buy-the-Dip trigger: $45.50 (stop loss: 42.40)

BUY the 2014 Jan $50 call (SOHU1418a50) current ask $6.70

Chart of SOHU:

Originally listed on the Watch List: 12/31/12


Active Watch List Candidates:



Analog Devices - ADI - close: 42.06

Comments:
12/31/12: ADI held up pretty well during the market's pullback last week. Today saw a +1.4% gain. Shares still look poised to move higher.

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)

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


Chevron Corp. - CVX - close: 108.14

Comments:
12/31/12: The correction in CVX continued last week but today's big intraday bounce allowed CVX to recoup a good chunk of its losses. We are still waiting. The next hurdle for CVX is resistance in the $110-111 area and its 100-dma.

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)

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


The Coca-Cola Company - KO - close: 36.25

Comments:
12/31/12: Shares of KO have continued to show weakness. The stock is flirting with a breakdown below support near the $36.00 level. Our plan was to buy calls if KO could close above $38.25 but that is unlikely to happen any time soon. Therefore we are dropping KO as a candidate.

Trade did not open.

12/31/12 removed KO from the newsletter

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


Urban Outfitters - URBN - close: 39.36

Comments:
12/31/12: Traders bought the dip near $38.00 several times last week. The stock displayed some relative strength today with a +2.9% gain. Our plan has not changed. We are waiting for a breakout.

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: 52.05

Comments:
12/31/12: VMC came close but did not hit our buy-the-dip trigger at $50.25. If there is no fiscal cliff deal then I expect VMC to drop toward support near $50.00. If there is a deal then VMC will likely rally with the market and we may want to buy calls on a close above the $54.00 level instead.

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