New Watch List Entries

TIF - Tiffany & Co

ZNGA - Zynga Inc.


Active Watch List Candidates

MRK - Merck & Co

WMT - Wal-Mart Stores


Dropped Watch List Entries

DLTR graduated to the play list.
CSCO has been removed.



New Watch List Candidates:


Tiffany & Co. - TIF - close: 69.04

Company Info

The payroll tax increase and rising gasoline prices are not going to affect the high-end consumer. That might be why shares of TIF have been showing relative strength. The stock recently broke through resistance in the $65-66 zone and now shares are nearing what is likely round-number resistance at $70.00.

I am suggesting we buy calls on a dip at $66.00. If triggered we'll start with a stop loss at $63.40. Out long-term target is $74.00 but readers could definitely aim higher.

NOTE: TIF is scheduled to report earnings on March 22nd.

Buy-the-Dip trigger: $66.00, stop loss 63.40

BUY the 2014 Jan $75 call (TIF1418a75) current ask $4.55

Chart of TIF:

Originally listed on the Watch List: 03/02/13


Zynga, Inc. - ZNGA - close: 3.43

Company Info

Zynga is the mastermind behind online games like FarmVille, MafiaWars, and Words with Friends. Many of its properties are found and played on your smart phone and social networks like FaceBook. The stock has been crushed from its early 2012 highs in the $15-16 zone. Yet it looks like all the bad news is backed in. Shares bottomed near $2.00 and have been slowly recovering. That recovery accelerated in February thanks to a better than expected earnings report.

ZNGA reported on Feb. 5th and beat analysts estimates by four cents. Most of that rally may have been short covering. However, there is a new story for ZNGA. Investors are starting to bet that ZNGA could be a player in the reintroduction of online real-money gambling when it returns to the U.S. There are plenty who believe that casinos have the upper hand over ZNGA but there might be room for multiple players in what is projected to be a $7 billion U.S. online gambling market.

I do consider this a higher-risk, more aggressive trade. Thus we will want to limit our position size. I am suggesting we wait for ZNGA to close above $3.80 and then buy calls the next day (or buy the stock itself). If triggered we'll start with a stop loss at $3.25. Our long-term target is $5.75 but we'll adjust that target as the play progresses.

Breakout trigger: Wait for a close above $3.80
Stop loss @ 3.25

BUY the 2014 Jan $5.00 call (ZNGA1418a5) current ask $0.55

- or -

BUY ZNGA the stock

Chart of ZNGA:

Originally listed on the Watch List: 03/02/13


Active Watch List Candidates:



Cisco Systems - CSCO - close: 20.83

Comments:
03/02/13: CSCO is still churning sideways. The stock has struggled to make any forward momentum for the last several weeks. I am dropping CSCO as a watch list candidate. We can revisit the stock if shares see a correction or eventually breakout past $21.50. Our trade did not open.

Trade did not open.

03/02/13 removed from the newsletter
02/02/13 adjust entry trigger to wait for a close above $21.50

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


Merck & Co. - MRK - close: 42.63

Comments:
03/02/13: The rebound in MRK stalled last week. Shares have been consolidating sideways. At the moment MRK still has a bearish trend of lower highs and technical resistance at the 100-dma and 150-dma. We are waiting on a bullish breakout higher.

I am suggesting we wait for MRK to close above $44.25 and then buy calls the next day. Our long-term target is $49.50 although the $48.00 level could be resistance.

Breakout trigger: Wait for MRK to close above $44.25,
then buy calls the next day, stop loss @ 41.45

BUY the 2014 Jan $45 call (MRK1418a45)

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BUY the 2015 Jan $45 call (MRK1517a45)

Originally listed on the Watch List: 02/23/13


Wal-Mart Stores - WMT - close: 71.74

Comments:
03/02/13: WMT displayed relative strength last week. The stock has fully recovered from the February sales email disaster story that sparked the gap down Feb. 15th. Currently WMT is hovering just below resistance near $72.00 and its simple 150-dma. Aggressive traders may want to launch bullish positions on a close above $72.00. 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.

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)

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BUY the 2015 Jan $80 call (WMT1517a80)

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