New Watch List Entries

BEAV - B/E Aerospace

LULU - Lululemon Athletica

UNP - Union Pacific


Active Watch List Candidates

AIG - Amer. Intl. Group

C - Citigroup Inc

CS - Credit Suisse

DIS - Walt Disney

EL - The Est

GM - General Motors

JPM - JPMorgan Chase & Co

V - Visa

WDC - Western Digital Corp


Dropped Watch List Entries



New Watch List Candidates:


B/E Aerospace Inc. - BEAV - close: 65.24

Company Info

As the name implies, BEAV is in the aerospace industry. The stock has been a consistent winner with investors buying dips to the rising 40-dma. Traders just did it again and bought the dip this past week. It seems investors do not care that BEAV guided its 2013 earnings forecast below consensus estimates when they reported earnings back in April.

Currently shares appear to be breaking out past resistance near the $65.00 level. This is a new all-time high but I'd like to see a little more confirmation. Friday's high was $65.55. Wait for a close above $65.75 and then buy calls the next day. We will start with a stop loss at $61.70. Our long-term target is $74.00.

Breakout trigger: Wait for a close above $65.75, then buy calls the next day.

BUY the 2014 Jan $70 call (BEAV1418a70) current ask $3.30

Chart of BEAV:

Originally listed on the Watch List: 06/08/13


Lululemon Athletica - LULU - close: 81.43

Company Info

LULU is a premium brand name for yoga apparel. The company suffered a little bit of an embarrassment when they had to remove their popular black yoga pants because the fabric was too sheer. According to the company the new black pants will be back in stores this month.

The stock has been hovering in the $78-82 zone and shares look poised to breakout higher. That will depend on the company's earnings results. LULU is scheduled to report earnings on June 10th (Monday), after the closing bell. Wall Street expects an estimate of 30 cents a share.

I am suggesting we wait for LULU to close above $82.50 and buy calls the next day. However, I have to put some conditions on this entry point. The most recent data listed short interest at 19% of the float. We don't want to launch positions on some huge rally higher. So, the plan is to wait for a close above $82.50 but we will not open positions if LULU closes above $84.00 (it needs to close inside the $82.50-84.00 zone, otherwise, no trade). If LULU were to suddenly surge a lot higher than expected and the stock were to close above $84.00 then we will abort this trade. I repeat, if LULU closes above $84.00 prior to a successful entry in the $82.50-84.00 zone then we will not open positions.

If triggered we'll start with a stop loss at $77.75. Our long-term target is $98.00.

Breakout trigger: Wait for a close in the $82.50-84.00 zone, then buy calls the next day
stop loss @ 77.75

BUY the 2014 Jan $90 call (LULU1418a90) current ask $5.90

- or -

BUY the 2015 Jan $100 call (LULU1517a100) current ask $8.35

Chart of LULU:

Originally listed on the Watch List: 06/08/13


Union Pacific Corp. - UNP - close: 158.13

Company Info

UNP is in the transportation sector. More specifically UNP is a railroad. The stock has been in a long-term up trend but shares seemed to get ahead of themselves. UNP had trouble near $160. Traders bought the dip this past week at its rising 40-dma. The bounce has ended the two-week decline. If this rally continues we want to be ready for a breakout higher.

I am suggesting investors wait for UNP to close above $161.00 and then buy calls the next morning. If triggered we wills tart with a stop loss at $151.00. Our long-term target is $185.00 for the 2014 calls and $200 for the 2015 calls.

Breakout trigger: Wait for a close above $161.00
stop loss @ 151.00

BUY the 2014 Jan $180 call (UNP1418a180) current ask $3.25

- or -

BUY the 2015 Jan $200 call (UNP1517a200) current ask $3.65

Chart of UNP:

Originally listed on the Watch List: 06/08/13


Active Watch List Candidates:



American Intl. Group - AIG - close: 45.28

Comments:
06/08/13: The stock market's reversal higher this past week may have postponed the correction in shares of AIG. More aggressive investors might want to consider buying calls if AIG can closed above $46.50. We will wait for a correction for now. Currently the plan is to buy calls on a dip at $38.50. If triggered at $38.50 we'll use a stop loss at $34.75. Our long-term target is the $45-50 zone.

Buy-the-Dip trigger: $38.50, stop loss @ 34.75

BUY the 2014 Jan $45 call (AIG1418a45)

- or -

BUY the 2015 Jan $50 call (AIG1517a50)

Originally listed on the Watch List: 06/01/13


Citigroup, Inc. - C - close: 51.60

Comments:
06/08/13: Just like the S&P 500, shares of C are bouncing from round-number support. Citigroup rebound near the $50.00 level but we do not want to chase it here.

Currently the plan is to wait for a correction lower and buy calls on a dip at $46.00. If triggered we want to start with small positions. Our long-term target is $59.00.

Buy-the-Dip trigger: $46.00, stop loss @ 42.40

BUY the 2014 Jan $50 call (C1418a50)

- or -

BUY the 2015 Jan $55 call (C1517a55)

Originally listed on the Watch List: 05/25/13


Credit Suisse Group - CS - close: 29.19

Comments:
06/08/13: Shares of CS briefly traded below technical support at its 50-dma and 100-dma on Thursday. The stock rebounded with the market on Friday. We are still waiting for a breakout to new 52-week highs. Wait for CS to close above $30.75 before initiating positions the next morning.

Earlier Comments:
If the stock closes above our trigger we can buy calls the next day with a stop loss at $27.75. More conservative investors may want to use a stop closer to $29.00 instead. We do want to keep our position size small since I consider this a more aggressive entry point given the market's major indices look over extended.

If triggered our long-term target is the $37.50-40.00 zone. The Point & Figure chart has a long-term target of $57.50.

Breakout trigger: Wait for a close above $30.75, then buy calls the next day
Use a stop loss at $27.75

BUY the 2014 Jan $33 call (CS1418a33)

- or -

BUY the 2015 Jan $35 call (CS1517a35)

06/01/13 adjust entry point: wait for a close above $30.75

Originally listed on the Watch List: 05/18/13


Walt Disney - DIS - close: 64.85

Comments:
06/08/13: The market's rebound produced a big bounce in DIS with shares ricocheting off $62 and closing just below short-term resistance at $65.00 by Friday. More aggressive investors could buy a breakout past $65 with a stop under Thursday's low. I would rather wait for a larger correction lower. The newsletter is suggesting readers use an entry trigger to buy calls on a dip at $57.00. If triggered we'll use a stop loss at $53.75. Our long-term target is the $75-80 zone.

Buy-the-Dip trigger: $57.00, stop @ 53.75

BUY the 2014 Jan $65 call (DIS1418a65)

- or -

BUY the 2015 Jan $65 call (DIS1418a65)

Originally listed on the Watch List: 06/01/13


The Est - EL - close: 68.12

Comments:
06/08/13: Wow! I have to confess that we may have just missed the entry point in our EL trade. Last weekend I adjusted our entry trigger from $65.50 to $65.00. This past week saw shares of EL correct down to $65.23 on Thursday and bounce. The market's rally on Friday helped lift EL to a +3.2% gain. If the current bounce continues we may have to adjust our strategy or drop EL as a candidate. For now the plan is unchanged.

Earlier Comments:
We want to keep our position size small to limit our risk.

Buy-the-dip strategy at $65.00, stop loss at $62.25

BUY the 2014 Jan $75 call (EL1418A75)

- or - BUY the 2015 Jan $75 call (EL1517A75)

06/06/13 EL dips to $65.23 and bounces
06/01/13 adjust the entry trigger to $65.00 (from 65.50)
add the 2015 calls options
05/18/13 strategy change: switch entry point to buy-the-dip at $65.50, move the stop loss to $62.25. Move the option strike to 2014 Jan $75 call

Originally listed on the Watch List: 05/04/13


General Motors - GM - close: 35.03

Comments:
06/08/13: Auto sales in the U.S. continue to improve. This past week saw the pace of motor vehicle sales in May hit 15.3 million. GM said sales were up +3% in May, year over year. Traders have been buying the dips in GM stock and shares are climbing in a narrow bullish channel. The stock may have had a little extra strength this past week as GM was added to the S&P 500 index again.

We don't want to chase GM here. If the stock doesn't correct soon we will have to re-evaluate our entry strategy. Currently I am suggesting investors use a buy-the-dip trigger at $30.00 to launch call positions on GM. If triggered we'll use a stop loss at $27.75. Our long-term target is the $36-40 zone.

Buy-the-Dip trigger: $30.00, stop @ 27.75

BUY the 2014 Jan $35 call (GM1418a35)

BUY the 2015 Jan $35 call (GM1517a35)

Originally listed on the Watch List: 06/01/13


JPMorgan Chase & Co. - JPM - close: 54.27

Comments:
06/08/13: With JPM's bearish reversal on May 31st it looked the stock was correcting lower. Yet traders bought the dip when the market bounced midday Thursday. I don't see any changes from my prior comments. I am expecting a correction back toward $50.00, which should be significant support.

We want to be ready to buy calls on a dip near support. I am suggesting a buy-the-dip trigger at $50.25. If triggered we will use a stop loss at $47.40. Our long-term target is $64.00.

Buy-the-Dip trigger: $50.25, stop 47.40

BUY the 2014 Jan $55 call (JPM1418a55)

- or -

BUY the 2015 Jan $55 call (JPM1517a55)

Originally listed on the Watch List: 05/25/13


Visa Inc. - V - close: 179.94

Comments:
06/08/13: Visa is still consolidating sideways. The stock did post a gain for the week so shares ended a two-week decline. Yet Visa still has a three-week bearish pattern of lower highs. There is no change from my prior comments.

We want to buy a dip at $171.00. If we are triggered at $171.00 I am suggesting a stop loss at $164.75. Our long-term target is $198.50.

Buy-the-Dip trigger: $171.00

BUY the 2014 Jan $180 call (V1418A180)

- or -

BUY the 2015 Jan $200 call (V1517A200)

Originally listed on the Watch List: 05/11/13


Western Digital Corp. - WDC - close: 64.15

Comments:
06/08/13: WDC continues to look strong. The stock did not react much to the market's recent volatility. Traders continue to buy the dips and WDC looks poised to breakout higher from its short-term sideways consolidation. I still don't want to chase it here.

WDC is up seven weeks in a row. Let's be patient and wait for a correction lower.

I am suggesting we wait and buy a dip at $55.00. If WDC hits our buy-the-dip trigger at $55.00 our long-term target is $70.00. The Point & Figure chart is currently forecasting a long-term target of $82.00. We'll start with a stop loss at $52.25.

Buy-the-Dip trigger: $55.00, stop loss @ 52.25

BUY the 2014 Jan $65 call (WDC1418a65)

- or -

BUY the 2015 Jan $70 call (WDC1517a70)

Originally listed on the Watch List: 05/18/13