New Watch List Entries

CL - Colgate-Palmolive

WLT - Walter Energy


Active Watch List Candidates

CSCO - Cisco Systems

WMT - Wal-Mart Stores


Dropped Watch List Entries

KO and SLB graduated to the play list.



New Watch List Candidates:


Colgate-Palmolive - CL - close: 110.02

Company Info

CL is a stock that marches to the beat of its own drum. The long-term trend is up but it's been a rocky ride. On the plus side the market seems to be ignoring any negative impacts that the recent de-valuation of the Venezuelan bolivar (local currency) might have on CL's sales and profit estimates. Traders are still buying the dips in CL stock and shares look poised to breakout to new all-time highs.

The January high was $111.37. I am suggesting we wait for shares of CL to close above $111.50 and then buy calls the next day. We'll use a stop loss at $106.75. Our long-term target is $124.50.

Breakout trigger: Wait for a close above $111.50, buy calls the next day
stop loss @ 106.75

BUY the 2014 Jan $115 call (CL1418a115) current ask $3.45

Chart of CL:

Originally listed on the Watch List: 02/16/13


Walter Energy - WLT - close: 37.92

Company Info

It has been a rough couple of years for the coal industry. Yet it looks like some of the coal names are starting to find a bottom. When WLT's rival CLF reported earnings this past week shares of CLF were crushed for a significant loss. Yet shares of WLT held its ground. That's a good sign.

Bigger picture WLT has spent almost nine months building a bottom below the $40.00 level. Now shares are poised to breakout past this resistance in addition to resistance at its simple 200-dma. If the global economy does manage to improve it would be bullish for WLT's metallurgical coal business.

WLT is scheduled to report earnings on Feb. 20th. Wall Street is expecting a loss of 90 cents a share. A better than expected earnings report could produce a breakout.

I am suggesting we wait for WLT to close above $41.00 a share and then buy calls the next day with a stop loss at $36.75. We do want to keep our position size small because WLT can be a volatile stock.

Breakout trigger: Wait for a close above $41.00, buy calls the next day
stop loss @ 36.75 *Small Positions*

BUY the 2014 Jan $50 call (WLT1418a50) current ask $2.85

Chart of WLT:

Originally listed on the Watch List: 02/16/13


Active Watch List Candidates:



Cisco Systems - CSCO - close: 20.99

Comments:
02/16/13: CSCO reported earnings on the 13th. The company beat estimates by three cents with a profit of 51 cents a share. Revenues also beat estimates at $12.1 billion. This was record high revenue for the eighth quarter in a row. Traders initially sold the news on Thursday morning but the stock rebounded. There is no change from my prior comments.

Currently the plan is to wait for CSCO to close above $21.50 and then buy calls the next day. Our long-term target is $27.00.

Breakout trigger: Wait for a close above $21.50, buy calls the next day,
stop loss at $19.25.

BUY the 2014 Jan $22 call (CSCO1418a22)

- or -

BUY the 2015 Jan $25 call (CSCO1517a25)

02/02/13 adjust entry trigger to wait for a close above $21.50

Originally listed on the Watch List: 01/12/13


Wal-Mart Stores - WMT - close: 69.30

Comments:
02/16/13: It was a rough week for shares of Wal-Mart (WMT). The stock had been struggling with technical resistance at its simple 100-dma. On Friday the stock was clobbered for a -2% loss thanks to bad news. A Bloomberg reporter got a hold of an internal Wal-Mart email. In this email WMT executives were bemoaning what a disaster February's month-to-date sales were. According to one executive it was the worst start to a month in his seven years in the business. WMT's customers seem to be suffering from the increase in the payroll tax (when the payroll tax holiday expired) and rising gas prices at the pump.

The stock did bounce off its Friday lows. We'll have to see if there is any follow through lower. I don't see any changes from my prior comments. I am suggesting investors wait for shares of WMT to close above $73.00 a share. Then buy calls the next day with a stop loss at $67.25. Our long-term target is the $85-90 range.

NOTE: WMT is scheduled to report earnings on Feb. 21st.

Trigger: Wait for WMT to close above $73.00, then buy calls the next day.
Stop loss @ 67.25

BUY the 2014 Jan $75 call (WMT1418a75)

- or -

BUY the 2015 Jan $80 call (WMT1517a80)

Originally listed on the Watch List: 02/02/13