New Watch List Entries

JNJ - Johnson & Johnson

SBUX - Starbucks Corp.


Active Watch List Candidates

AIG - Amer. Intl. Group

BZH - Beazer Homes

DIS - Walt Disney

GM - General Motors

HOV - Hovnanian Enter.

JPM - JPMorgan Chase & Co

K - Kellogg Co.

UNP - Union Pacific

V - Visa

WDC - Western Digital Corp


Dropped Watch List Entries

BEAV and C have graduated to our active play list.



New Watch List Candidates:


Johnson & Johnson - JNJ - close: 83.20

Company Info

JNJ delivered one of the most impressive rallies in 2013. That rally peaked in mid May with the failure at the $90.00 level. Since then JNJ has been correcting lower. I suspect the correction continues but we want to use the pullback to our advantage.

Tonight I am suggesting buy calls on a dip at $77.50. If triggered we'll start with a stop loss at $74.45. Our long-term target is the $85-90 zone.

Buy-the-Dip trigger: $77.50

BUY the 2014 Jan $80 call (JNJ1418a80) current ask $5.85

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BUY the 2015 Jan $85 call (JNJ1517a85) current ask $5.70

Chart of JNJ:

Originally listed on the Watch List: 06/23/13


Starbucks Corp. - SBUX - close: 64.69

Company Info

SBUX has been a strong performer this year with a breakout to new record highs this spring. The market's recent weakness has created a bearish reversal in shares of SBUX. We want to be ready to buy the dip when SBUX nears support.

I am suggesting a buy-the-dip trigger at $60.25. If triggered we'll start with a stop loss at $55.65.

Buy-the-Dip trigger: $60.25

BUY the 2014 Jan $65 call (SBUX1418a65) current ask $4.85

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BUY the 2015 Jan $70 call (SBUX1517a70) current ask $6.20

Chart of SBUX:

Originally listed on the Watch List: 06/23/13


Active Watch List Candidates:



American Intl. Group - AIG - close: 43.69

Comments:
06/23/13: AIG has retreated toward the bottom of its $43-46.50 trading range. The stock is now testing technical support at its 50-dma. I am still anticipating a correction toward $40.00.

The plan is to buy calls on a dip at $40.00. Our long-term target is the $45-50 zone.

Buy-the-Dip trigger: $40.00, stop loss @ 36.35

BUY the 2014 Jan $45 call (AIG1418a45)

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BUY the 2015 Jan $50 call (AIG1517a50)

06/16/13 adjust entry strategy: move the buy-the-dip trigger to $40.00, from 38.50. Move the stop loss to $36.35 from 34.75.

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


Beazer Homes - BZH - close: 17.83

Comments:
06/23/13: Many of the homebuilders were crushed this past week on worries that rising interest rates would kill the housing recovery. BZH was a significant underperformer. Traders did buy the dip near its 200-dma on Friday morning.

Currently our plan is to wait for BZH to close above $20.50 and then buy calls the next day. However, given the sell-off we may have to reconsider our strategy. Let's give BZH another week to see how it performs.

Earlier Comments:
I am suggesting investors wait for BZH to close above $20.50 and then buy calls the next day. If triggered we will start with a stop loss at $18.45. Our long-term target is $26.00.

Please note that I am suggesting we keep our position size small to limit our risk.

Breakout trigger: Wait for a close above $20.50, stop $18.45

BUY the 2014 Jan $22 call (BZH1418a22)

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BUY the 2015 Jan $25 call (BZH1517a25)

Originally listed on the Watch List: 06/16/13


Walt Disney - DIS - close: 62.73

Comments:
06/23/13: We've been hoping for a correction lower in shares of DIS. The best it could do was a pullback to short-term support near $62.00. We're not giving up yet.

Earlier Comments:
More aggressive investors could jump in on a dip or a bounce near $60.00. 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)

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BUY the 2015 Jan $65 call (DIS1418a65)

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


General Motors - GM - close: 32.21

Comments:
06/23/13: GM's correction is now two weeks old and shares are testing their 50-dma. We are expecting a decline toward round-number support at $30.00.

Earlier Comments:
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


Hovnanian Enterprises - HOV - close: 5.59

Comments:
06/23/13: My comments on BZH also apply to HOV. This is another homebuilder that was crushed as investors worry over rising interest rates. Shares erased almost all of its May-June gains in just three days. We're going to give HOV another week and then re-evaluate.

Earlier Comments:
I am suggesting we buy calls on HOV (or buy HOV stock) if shares hit $6.61. No waiting for a close above a certain level. If HOV hits our trigger at $6.61 our long-term target is $8.75. However, I will point out that HOV could have significant resistance in the $7.00 region. Therefore I am suggesting we keep our position size small to limit our risk.

Breakout trigger: $6.61, stop loss @ 5.98

BUY the 2014 Jan $7.00 call (HOV1418a7)

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BUY the 2015 Jan $7.00 call (HOV1517a7)

- or -

BUY HOV stock @ $6.61

Originally listed on the Watch List: 06/16/13


JPMorgan Chase & Co. - JPM - close: 51.96

Comments:
06/23/13: So far so good. We just need to be patient. The plan is to buy calls on a dip at near $50.00.

Earlier Comments:
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.

FYI: JPM is due to report earnings on July 12th.

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

BUY the 2014 Jan $55 call (JPM1418a55)

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BUY the 2015 Jan $55 call (JPM1517a55)

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


Kellogg Co. - K - close: 63.25

Comments:
06/23/13: There is no change from my prior comments on K. We're waiting for a new high. It's worth noting that last week's performance did create a new bearish engulfing candlestick reversal pattern. We could see K hit a new relative low before reversing higher.

Earlier Comments:
This newsletter is suggesting investors wait for shares of K to close above $67.00 and then buy calls the next morning.

Breakout trigger: Wait for a close above $67.00, stop loss $63.75.

BUY the 2015 Jan $75 call (K1517a75)

Originally listed on the Watch List: 06/16/13


Union Pacific Corp. - UNP - close: 152.69

Comments:
06/23/13: Transportation stocks were underperforming on Friday. UNP was no exception. Shares are testing technical support at their 50-dma. Right now we are waiting for a breakout higher but we will reconsider our entry strategy if UNP drops toward the $145-140 zone.

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

FYI: UNP is scheduled to report earnings on July 18th.

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

BUY the 2014 Jan $180 call (UNP1418a180)

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BUY the 2015 Jan $200 call (UNP1517a200)

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


Visa Inc. - V - close: 179.50

Comments:
06/23/13: Believe it or not but Visa hit a new all-time high this past week. It was on an intraday basis with shares peeking above resistance at the $185.00 level. The pullback over the last few days has suddenly created what is starting to look like a bearish double top pattern.

We are still waiting for a correction lower.

Earlier Comments:
The newsletter is suggesting investors buy calls on a dip at $171.00. Our long-term target is $198.50.

Buy-the-Dip trigger: $171.00, stop loss $164.50.

BUY the 2014 Jan $180 call (V1418A180)

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BUY the 2015 Jan $200 call (V1517A200)

06/16/13 I am adjusting the stop loss to $164.50 from 164.75.

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


Western Digital Corp. - WDC - close: 60.19

Comments:
06/23/13: We have been patiently waiting for WDC to see a correction. The stock had produced a seven-week rally high but that rally stalled two weeks ago. Last week saw shares fail near resistance in the $65.00 region again. Then the market's sell-off began and WDC gave up nearly five points.

So far this year WDC has found support at its rising 50-dma. That could happen again with the 50-dma near $59.00. However, I suspect it will break this time. Maybe not on the first test. Big picture we're waiting for a dip to $55.00.

Earlier Comments:
I am suggesting we wait and buy a dip at $55.00. The Point & Figure chart is currently forecasting a long-term target of $82.00. We'll start with a stop loss at $52.25.
If triggered our target to exit the 2014 calls is $65.
If triggered our target to exit the 2015 calls is $75 on WDC.

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

BUY the 2014 Jan $65 call (WDC1418a65)

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BUY the 2015 Jan $70 call (WDC1517a70)

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