New Watch List Entries

BAC - Bank of America

EL - The Estee Lauder Cos

M - Macy's Inc


Active Watch List Candidates

MRK - Merck & Co

TIF - Tiffany & Co

ZNGA - Zynga Inc.


Dropped Watch List Entries

WMT graduated to our play list.



New Watch List Candidates:


Bank of America - BAC - close: 12.07

Company Info

The financial sector has been showing relative strength and the financial sector indices and ETFs are hitting new four-year highs. BAC is trading near its 52-week high and looks poised to breakout from its two-month trading range. If a breakout does occur shares of BAC could outperform as it tries to catch up with its peers.

I am suggesting investors wait for BAC to close above $12.55 and then buy calls the next morning with a stop loss at $10.90. Our long-term target is $18.00.

Breakout trigger: Wait for BAC to close above $12.55,
then buy calls the next day, stop loss @ 10.90

BUY the 2014 Jan $15 call (BAC1418a15) current ask $0.44

- or -

BUY the 2015 Jan $15 call (BAC1517a15) current ask $1.13

Chart of BAC:

Originally listed on the Watch List: 03/09/13


The Estee Lauder Companies - EL - close: 65.70

Company Info

Shares of this cosmetics giant are trading near all-time highs. Investors have been buying the dips for years and now EL is poised to breakout into new historic highs. The $65-66 area has been resistance for months. I am suggesting we wait for EL to close above $66.55 and then buy calls the next day. I am suggesting that we start with small positions (half your normal trade size) to limit our risk. Our long-term target is $74.50.

Breakout trigger: Wait for EL to close above $66.55,
then buy calls the next day, stop loss @ 61.90

BUY the 2014 Jan $70 call (EL1418a70) current ask $3.90

03/09/13 keep positions small to start!

Chart of EL:

Originally listed on the Watch List: 03/09/13


Macy's Inc. - M - close: 41.67

Company Info

Shares of this department store (retail) giant are poised for a bullish breakout past major resistance. Investors do not seem to be concerned about the effects that higher gasoline prices and the recent payroll tax increase might have on consumer spending. Macy's could be a safer bet in the retail sector since the last time the company reported earnings management raised their full year guidance.

Currently shares of M are hovering just below major resistance near the $42.00 level. I am suggesting we wait for Macy's to close above $42.50 and then buy calls the next morning with a stop loss at $39.25. If triggered our long-term target is $48.50. FYI: The Point & Figure chart is bullish with a $53 target.

Breakout trigger: Wait for M to close above $42.50,
then buy calls the next day, stop loss @ 39.25

BUY the 2014 Jan $45 call (M1418a45) current ask $2.37

Chart of M:

Originally listed on the Watch List: 03/09/13


Active Watch List Candidates:



Merck & Co. - MRK - close: 42.97

Comments:
03/09/13: Shares of MRK did see an upgrade this past week but the rally ran out of steam. The stock reversed near resistance at its 150-dma and the $44 level. I don't see any changes from my prior comments.

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)

- or -

BUY the 2015 Jan $45 call (MRK1517a45)

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


Tiffany & Co. - TIF - close: 70.25

Comments:
03/09/13: TIF continues to push higher but the rally did stall just past the $70.00 level. I am still expecting a correction lower. Broken resistance near $66.00 should be new support. We will adjust our buy-the-dip entry point to $66.50.

If triggered we'll start with a stop loss at $63.40. Our 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: $66.50, stop loss 63.40

BUY the 2014 Jan $75 call (TIF1418a75)

03/09/13 adjust buy-the-dip trigger to $66.50

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


Zynga, Inc. - ZNGA - close: 3.57

Comments:
03/09/13: ZNGA surged on Monday but there was no follow through higher. Shares spent the rest of the week drifting sideways. The consolidation is narrowing, which would suggest ZNGA is poised for a breakout, one way or the other. I don't see any changes from my prior comments.

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)

- or -

BUY ZNGA the stock

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