New Watch List Entries

M - Macy's Inc.

MNST - Monster Beverage

WFM - Whole Foods Market


Active Watch List Candidates

AIG - Amer. Intl. Group

BZH - Beazer Homes

DIS - Walt Disney

GM - General Motors

JNJ - Johnson & Johnson

K - Kellogg Co.

SBUX - Starbucks Corp.

UNP - Union Pacific

V - Visa


Dropped Watch List Entries

Removed WDC.



New Watch List Candidates:


Macy's Inc. - M - close: 49.18

Company Info

Macy's operates a chain of department stores. Considering the slow pace of consumer spending it's somewhat surprising to see shares of Macy's performing so well. One could argue that the rising price of oil and thus gasoline could put a crimp on consumer spending. Yet shares of M continue to climb. The stock's recent consolidation almost looks like a bull-flag pattern. This past week shares have rallied toward resistance in the $50.00 area.

I am suggesting we wait for M to close above $50.25 and then buy calls the next day with a stop loss at $47.25. If triggered our long-term target is $59.00. More aggressive investors may want to aim higher since the point & figure chart is forecasting a $76 target.

Breakout trigger:
Wait for M to close above $50.25, then buy calls the next day
stop loss at $47.25

BUY the 2014 Jan $55 call (M1418a55) current ask $1.44

- or -

BUY the 2015 Jan $55 call (M1517a55) current ask $3.90

Chart of M:

Originally listed on the Watch List: 07/07/13


Monster Beverage Corp. - MNST - close: 60.59

Company Info

MNST is best known for its Monster energy drinks. The company actually makes a number of different beverages and drink supplements. The stock has been volatile but the trend is up. One reason the stock is volatile is the controversy surrounding some of its energy drinks. There have been allegations that MNST's highly caffeinated drinks are dangerous and contributed to some deaths in recent years. Thus far there has been little evidence to support these claims.

I do consider this an aggressive, higher-risk trade because of the volatility and the risk that another headline regarding the safety of MNST's drinks could send shares lower. Therefore I am suggesting we keep our position size small to limit risk.

Currently MNST has resistance in the $62.50-63.00 area. I am suggesting we wait for MNST to close above $63.00 and then buy calls the next day with a stop loss at $57.90. Our target is $74.00.

Breakout trigger:
Wait for MNST to close above $63.00, then buy calls the next day
stop loss at $57.90 *Small Positions*

BUY the 2014 Jan $70 call (MNST1418a70) current ask $3.30

- or -

BUY the 2015 Jan $70 call (MNST1517a70) current ask $7.80

Chart of MNST:

Originally listed on the Watch List: 07/07/13


Whole Foods Market - WFM - close: 53.23

Company Info

WFM is a high-end grocery chain. My comments in the Macy's description above also apply here. Slowing consumer spending and rising fuel costs could hurt WFM sales but so far the stock is not reflecting any investors worry. In early May shares of WFM gapped higher after a better than expected earnings report and management guiding earnings higher. Since then the stock has been consolidating sideways in the $50-53.25 zone.

At the moment WFM looks poised to breakout from this trading range. I am suggesting we wait for WFM to close above $54.00 and then buy calls the next day. Use a stop loss at $49.75. If triggered our long-term target is $59.75 for the 2014 calls and $64.00 for the 2015 calls.

Breakout trigger:
Wait for WFM to close above $54.00, then buy calls the next day
stop loss at $49.75

BUY the 2014 Jan $60 call (WFM1418a60) current ask $1.86

- or -

BUY the 2015 Jan $60 call (WFM1517a60) current ask $5.65

Chart of WFM:

Originally listed on the Watch List: 07/07/13


Active Watch List Candidates:



American Intl. Group - AIG - close: 45.19

Comments:
07/07/13: AIG posted a gain for the week but the momentum of its rebound seemed to stall a bit. We've been waiting for a correction toward support near $40.00 but that may not happen. Tonight I am adjusting our entry strategy.

AIG has resistance near $46.50. We will move the trigger to $46.75. Wait for AIG to close above $46.75 and then buy calls the next day with a stop loss at $41.40. We will move our long-term target to $55.00. I am adjusting our option strikes tonight as well.

Breakout trigger: wait for close above $46.75
stop loss at $41.40 to start.

BUY the 2014 Jan $50 call (AIG1418a50) current ask $2.21

- or -

BUY the 2015 Jan $55 call (AIG1517a55) current ask $3.90

07/07/13 adjust entry strategy: wait for shares to close above $46.75 and then buy calls the next day. Stop loss at $41.40. Target 55.00.
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: 17.22

Comments:
07/07/13: BZH lost 30 cents for the week. Shares produced a decent rebound off its intraday low on Friday. It almost looks like a bullish double bottom with the late June low. We need to either adjust our entry strategy or drop BZH as a candidate. I am suggesting we watch it one more week and then make that decision.

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)

- or -

BUY the 2015 Jan $25 call (BZH1517a25)

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


Walt Disney - DIS - close: 63.82

Comments:
07/07/13: DIS posted a gain for the week but it was rather anemic. Shares are still stuck under the six-week trend of lower highs and technical resistance at its 50-dma. More aggressive traders may want to consider buying calls if DIS can close above $65.00. For the moment we are going to stick to our buy-the-dip strategy. However, I am moving our entry trigger from $57.00 to $58.00.

Earlier Comments:
If triggered we'll use a stop loss at $53.75. Our long-term target is the $75-80 zone.

Buy-the-Dip trigger: $58.00, stop @ 53.75

BUY the 2014 Jan $65 call (DIS1418a65)

- or -

BUY the 2015 Jan $65 call (DIS1418a65)

07/07/13 adjust entry trigger from $57.00 to $58.00

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


General Motors - GM - close: 34.67

Comments:
07/07/13: The bounce in GM continued last week. The auto industry got a boost from strong June sales numbers. U.S. car sales are on pace for 15.5 million units this year. We've seen the best pace for car sales in the first six months of the year since 2007.

I do not want to chase GM at current levels yet it may not correct toward support near $30.00. We will give GM another week or two and then re-evaluate our entry point strategy.

FYI: GM is due to report earnings on July 25th.

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: $30.50, stop @ 27.75

BUY the 2014 Jan $35 call (GM1418a35)

BUY the 2015 Jan $35 call (GM1517a35)

06/30/13 adjust buy-the-dip entry trigger to $30.50, from $30.00.

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


Johnson & Johnson - JNJ - close: 87.87

Comments:
07/07/13: JNJ is not cooperating with our buy-the-dip strategy. Instead the stock has produced a strong two-week bounce. After consolidating sideways the last few days JNJ looks poised to breakout past the $88 level and challenge its recent highs near $90.00.

Nimble traders may want to consider buying calls if JNJ can close above $90.00. I am willing to readjust our entry point strategy but JNJ reports earnings on July 16th. We will wait until after JNJ reports earnings and then re-evaluate this trade set up.

Earlier Comments:
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)

- or -

BUY the 2015 Jan $85 call (JNJ1517a85)

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


Kellogg Co. - K - close: 65.34

Comments:
07/07/13: There is no change from my earlier comments on Kellogg. The stock appears to be breaking out from a bull-flag pattern. More aggressive traders could buy calls now. I am suggesting investors wait for 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


Starbucks Corp. - SBUX - close: 67.72

Comments:
07/07/13: SBUX is racing higher without us. Shares just closed at a new all-time high on Friday. The stock remains inside its bullish channel. Right now the bottom of that channel (support) is near the simple 40-dma. It is unlikely that SBUX is going to hit our current entry trigger at $60.25. However, I do not want to chase it here. Let's give SBUX another week to see how it performs and then we will re-evaluate.

Earlier Comments:
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)

- or -

BUY the 2015 Jan $70 call (SBUX1517a70)

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


Union Pacific Corp. - UNP - close: 157.48

Comments:
07/07/13: So far so good. UNP is still bouncing. The stock is on the verge of breaking through the six-week trend of lower highs. I don't see any changes from my previous comments. More aggressive investors may want to consider buying calls if UNP can close above $158.

NOTE: Conservative investors will want to consider waiting until after UNP's earnings report on July 18th before initiating any positions (regardless of where UNP's stock price is).

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)

- or -

BUY the 2015 Jan $200 call (UNP1517a200)

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


Visa Inc. - V - close: 190.79

Comments:
07/07/13: Up, up and away! Visa continues to show strength and the stock broke out from its $175-185 trading range this past week. Shares are now at all-time highs. Nimble traders could try and buy calls on a dip in the $187-185 zone since $185 should be new support. I am concerned that Visa could see some profit taking after the company reports earnings on July 24th.

It does seem unlikely that shares will hit our buy-the-dip trigger at $171 now. Tonight I am updating our entry point strategy. move the buy-the-dip trigger to $180.50. We will move the stop loss to $174.40. I am also raising the option strikes. Our long-term target is $199.00.

Buy-the-Dip trigger: $180.50, stop loss $174.40.

BUY the 2014 Jan $200 call (V1418A200)

- or -

BUY the 2015 Jan $220 call (V1517A220)

07/07/13 updated the buy-the-dip entry trigger to $180.50.
Moved the stop loss to $174.40.
Updated the option strikes
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: 64.51

Comments:
07/07/13: WDC has continued to bounce and shares are once again testing resistance near $65.00. More aggressive traders may want to buy calls on a breakout past $65.25. The company is due to report earnings in about two weeks. We do not want to chase it at new highs just prior to earnings. Therefore, tonight I am removing WDC as a candidate. We can look at it again after it reports earnings in late July.

Trade did not open.

07/07/13 removed WDC as a candidate. Look at it again after its earnings report in late July.

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