New Watch List Entries

DD - E.I. du Pont

FLR - Fluor Corp.


Active Watch List Candidates

DG - Dollar General

GE - General Electric

KMB - Kimberly-Clark

ODFL - Old Dominion Freight Lines

PFE - Pfizer Inc.

PG - Procter & Gamble

YUM - Yum! Brands Inc.


Dropped Watch List Entries

None.



New Watch List Candidates:


E.I. du Pont - DD - close: 59.74

Company Info

Dow Jones Industrial component DD has rallied to levels not seen since the year 2000. The stock's bullish trend has pushed shares to resistance near $60.00 and DD looks poised to breakout soon. If investors really expect the U.S. economy to expand in the second half then that should mean higher depend for basic materials.

The intraday high in mid July was $60.50. I am suggesting we wait for DD to close above $60.50 and then buy calls the next morning with a stop loss at $57.90. Our long-term target is $69.00.

FYI: DD is due to begin trading ex-dividend on August 13th. The quarterly cash dividend is 45 cents.

Breakout trigger: Wait for DD to close above $60.50
Then buy calls the next day. Stop loss @ 57.90.

BUY the 2014 Jan $65 call (DD1418a65) current ask $0.79

- or -

BUY the 2015 Jan $65 call (DG1517a65) current ask $2.85

Chart of DD:

Originally listed on the Watch List: 08/11/13


Fluor Corp. - FLR - close: 65.98

Company Info

FLR is in the industrial goods sector. The company provides heavy construction services. The company reported earnings on August 1st. FLR missed both the top and bottom line estimates. If that wasn't bad enough management lowered their 2013 guidance. Yet in spite of a trifecta of bearish news the stock rallied anyway.

Shares are currently hovering below resistance in the $66-67 level. This also happens to be the neckline of an inverse or bullish reversion of a head-and-shoulders pattern. A breakout past this level would forecast a rally toward the 2011 highs. The Point & Figure chart is even more bullish with an $82 target.

I am suggesting we wait for FLR to close above $67.00 and then buy calls the next morning. If triggered we'll start with a stop loss at $63.75. Our long-term target is $74.75.

Breakout trigger: Wait for FLR to close above $67.00
Then buy calls the next day. Stop loss @ 63.75.

BUY the 2014 Jan $70 call (FLR1418a70) current ask $2.85

- or -

BUY the 2015 Jan $75 call (FLR1517a75) current ask $5.30

Chart of FLR:

Originally listed on the Watch List: 08/11/13


Active Watch List Candidates:



Dollar General Corp. - DG - close: 54.25

Comments:
08/11/13: DG retreated from resistance near $56 last week. Shares did see a bounce on Thursday thanks to merger speculation. A Credit Suisse analyst suggested that DG and Family Dollar Stores (FDO) would make a good combo.

I don't see any changes from my earlier comments. I am suggesting we wait for DG to close above $56.50. If that entry requirement is met then we can buy calls the next morning with a stop loss at $52.45. Our long-term target is $64.00 for the 2014 calls. Our target is $69.00 for the 2015 calls.

FYI: The point & figure chart is bullish with a $78.00 target.
DG is due to report earnings in early September.

Breakout trigger: Wait for DG to close above $56.50
Then buy calls the next day. Stop loss @ 52.45.

BUY the 2014 Jan $60 call (DG1418a60)

- or -

BUY the 2015 Jan $70 call (DG1517a70)

Originally listed on the Watch List: 08/04/13


General Electric - GE - close: 24.25

Comments:
08/11/13: GE spent the week consolidating lower. More aggressive investors might want to consider buying calls near the $24 level, which should offer some support. I am suggesting readers stick to our initial plan and wait for a breakout. We want to wait for GE to close above $25.25 and then buy calls the next day with a stop loss at $22.90. More conservative investors might want to use a stop closer to $24 instead. Our long-term target is $30.00.

Breakout trigger: Wait for GE to close above $25.25
Then buy calls the next day. Stop loss @ 22.90.

BUY the 2014 Jan $25 call (GE1418a25)

- or -

BUY the 2015 Jan $30 call (GE1517a30)

Originally listed on the Watch List: 08/04/13


Kimberly-Clark - KMB - close: 98.53

Comments:
08/11/13: KMB spent the week drifting from resistance near $100 to short-term support near $98.00. I don't see any changes from my earlier comments.

I am suggesting a trigger to buy calls if KMB can close above $102.00. Once it closes above $102.00 we'll buy calls the next day. Our long-term target is $115.00.

Breakout trigger: Wait for KMB to close above $102.00
buy calls the next day. Start with a stop loss at $95.75

BUY the 2014 Jan $105 call (KMB1418a105)

- or -

BUY the 2015 Jan $110 call (KMB1517a110)

Originally listed on the Watch List: 07/28/13


Old Dominion Freight Line - ODFL - close: 45.12

Comments:
08/11/13: As a group the transports were showing relative weakness last week. Yet ODFL bucked the trend and managed another weekly gain. The stock has been flirting with a rally past the $45.25 level but can't quite close above it. The intraday high on August 6th was $45.50. Tonight we're adjusting our entry trigger from $45.25 to $45.50. Wait for ODFL to close above $45.50 and then buy calls the next day.

Earlier Comments:
We want to start with a stop loss at $41.95. Our long-term target is $54.00.

Breakout trigger: Wait for ODFL to close above $45.50
buy calls the next day. Start with a stop loss at $41.95

BUY the 2014 Jan $50 call (ODFL1418a50) current ask $1.25

08/11/13 adjust the entry trigger. Wait for ODFL to close above $45.50 instead of $45.25.

Originally listed on the Watch List: 07/28/13


Pfizer Inc. - PFE - close: 29.21

Comments:
08/11/13: It turned out to be a quiet week for PFE. The stock drifted sideways inside the $29.00-29.50 zone.

I am still suggesting investors wait for PFE to close above $30.25. If that occurs we can launch positions the next morning. We'll start with a stop loss at $28.45. Our long-term target is $35.00.

FYI: That's not a typo. At $29.37, PFE is unchanged for the week.

Breakout trigger: Wait for PFE to close above $30.25
buy calls the next day. Start with a stop loss at $28.45

BUY the 2014 Jan $30 call (PFE1418a30)

- or -

BUY the 2015 Jan $30 call (PFE1517a30)

Originally listed on the Watch List: 07/28/13


Procter & Gamble Co. - PG - close: 81.64

Comments:
08/11/13: PG displayed some relative strength with a gain for the week. Yet shares remain below resistance near $82.50.

I am suggesting we wait for PG to close above $83.00 and then buy calls the next day with a stop loss at $79.25. Our target to exit the 2014 calls is at $89.00. Our target to exit the 2015 calls is $98.00.

FYI: PG's point & figure chart is bullish and is forecasting a $97 target.

Breakout trigger: Wait for PG to close above $83.00
Then buy calls the next day. Stop loss @ 79.25.

BUY the 2014 Jan $85 call (PG1418a85)

- or -

BUY the 2015 Jan $90 call (PG1517a90)

Originally listed on the Watch List: 08/04/13


Yum! Brands - YUM - close: 74.40

Comments:
08/11/13: Shares of YUM closed virtually unchanged for the week. When you consider the rest of the market was sinking then YUM's lack of movement is a win for the bulls. The stock looks poised to breakout past resistance near $75.00 soon.

I am suggesting we wait for YUM to close above $75.25. Once that occurs we'll buy calls the next morning with a stop loss at $69.75. You may want to use a tighter stop. Our long-term target is $89.00. FYI: The P&F chart is bullish with a $94 target.

Breakout trigger: Wait for YUM to close above $75.25
Then buy calls the next day. Stop loss @ 69.75.

BUY the 2015 Jan $85 call (YUM1517a85) current ask $4.20

Originally listed on the Watch List: 08/04/13