New Watch List Entries

MAKO - MAKO Surgical

MDVN - Medivation, Inc.

SJM - The J. M. Smucker Co.


Active Watch List Candidates

DD - E.I. du Pont

DECK - Deckers Outdoor Corp.

DG - Dollar General

FLR - Fluor Corp.

HOG - Harley Davidson

KORS - Michael Kors Holdings

NVDA - NVIDIA Corp.

PFE - Pfizer Inc.

STZ - Constellation Brands

VRSN - VeriSign, Inc.


Dropped Watch List Entries

GE, PG, and YUM have all been removed.



New Watch List Candidates:


MAKO Surgical Corp. - MAKO - close: 14.95

Company Info

MAKO is a medical device company. The stock suffered an extremely painful year in 2012 with a plunge from $45 a share toward $13 thanks to missed earnings numbers and lowered guidance. Since then it looks like MAKO has finally found a bottom. The latest earnings report in July was still a miss but traders bought the news anyway.

More recently shares have been showing relative strength and have put together a two-week rally while the market sinks. I am suggesting we wait for MAKO to close above $15.25 and then buy calls the next day with a stop loss at $13.95. More conservative investors may want to wait for MAKO to close above $16.25 as an alternative entry point since the $16.00 level has been resistance in the past.

If we are triggered our long-term target is $19.50. FYI: The point & figure chart is bullish with a $24 target.

Breakout trigger: Wait for a MAKO to close over $15.25
then buy calls the next day with a stop loss at $13.95

BUY the 2014 Jan $15 call (MAKO1418a15) current ask $1.95

- or -

BUY the 2015 Jan $20 call (MAKO1517a20) current ask $2.40

Chart of MAKO:

Originally listed on the Watch List: 09/01/13


Medivation - MDVN - close: 56.53

Company Info

MDVN is a biotech company. The headline currently moving the stock is MDVN's prostate cancer drug, Xtandi. Some analysts expect that sales could soar from $230 million a year now toward $2.2 billion in less than ten years. Others are speculation that MDVN could be a takeover target.

Shares have been chopping sideways in a very wide $42-60 trading range for several months. A breakout past resistance near $60.00 would be very bullish. You'll notice that the consolidation has been narrowing near the top of its range, which might suggest a breakout higher is approaching.

I am suggesting an intraday trigger to buy MDVN at $61.00. More conservative investors might want to wait for MDVN to close above $60 or close above $61 as an alternative entry point. If MDVN hits $61.00 we'll start with a stop loss at $54.90. Our long-term target is $75.00 but we may have to adjust it given our time frame. I'm only listing the 2014 calls. MDVN does have 2015 calls but the spreads are too wide.

NOTE: MDVN's options look a little expensive. I am suggesting smaller positions to limit our exposure.

Breakout trigger: $61.00

BUY the 2014 Jan $65 call (MDVN1418a65) current ask $5.90

Chart of MDVN:

Originally listed on the Watch List: 09/01/13


The J. M. Smucker Company - SJM - close: 106.14

Company Info

SJM operates three segments: U.S. Retail Coffee; U.S. Retail Consumer Foods; and International, Foodservice, and Natural Foods (source: YahooFinance). They market their products under a number of well known brand names. The July rally pushed SJM to new all-time highs. Since then shares have seen an orderly and consistent correction back down toward prior resistance near $105. This level should be new support. It's no coincidence that SJM's correction also stalled near its longer-term up trend of higher lows.

If SJM bounces from support here we want to be ready. The simple 50-dma is currently at $108.00. I am suggesting we wait for SJM to close above $108.50. If that occurs we can buy calls the next day with a stop loss at $104.25, just below Thursday's lows (Aug. 29th). I do expect some resistance near $115.00 but we're aiming for $119.00.

trigger: Wait for SJM to close above $108.50
then buy calls the next day. Stop loss @ 104.25

BUY the 2014 Jan $115 call (SJM1418a115) current ask $1.65

Chart of SJM:

Weekly Chart of SJM:

Originally listed on the Watch List: 09/01/13


Active Watch List Candidates:



E.I. du Pont - DD - close: 56.62

Comments:
09/01/13: The correction lower in DD continues. The stock is now down four weeks in a row. It is worth noting that DD has been holding at technical support on its 50-dma the last few days. I am willing to give DD another week to see if shares continue to drop or if they start to recover before dropping it as a candidate. Nimble investors might want to consider buying a bounce off the $55 level and use a tight stop loss. Officially the newsletter is waiting for a breakout past resistance near $60.00.

Earlier Comments:
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.

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)

- or -

BUY the 2015 Jan $65 call (DG1517a65)

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


Deckers Outdoor Corp. - DECK - close: 58.73

Comments:
09/01/13: Traders bought the dip midweek and DECK pared its losses. Shares still look poised to breakout past major resistance near the $60.00 level.

Earlier Comments:
I am suggesting we wait for DECK to close above $60.50 and then buy calls the next day with a stop loss at $55.75. However, I am putting a limit on this entry point. Do not open positions if DECK closes above $62.00. More aggressive traders could an intraday trigger instead waiting for a close above $60.50. If triggered our target is $74.00. FYI: The point & figure chart is forecasting a bullish target of $87.00.

We want to keep our position size small to limit our risk. DECK can be a volatile stock.

Breakout trigger: Wait for DECK to close above $60.50
Then buy calls the next day. Stop loss @ 55.75.
* do NOT launch positions if DECK closes above $62.00. *

BUY the 2014 Jan $65 call (DECK1418a65)

- or -

BUY the 2015 Jan $70 call (DECK1517a70)

Originally listed on the Watch List: 08/25/13


Dollar General Corp. - DG - close: 53.97

Comments:
09/01/13: DG flirted with a breakout past resistance near $56.00 last Monday. The rally failed and shares are now down four days in a row. We're not giving up yet. DG is due to report earnings on September 4th. Wall Street expects a profit of 74 cents a share. More conservative traders may want to wait until after we see how the market reacts to DG's earnings before considering new positions, regardless of our suggested entry point below.

I am suggesting we wait for DG to close above $56.50. However, I am putting a limit on this entry strategy. We do not want to launch positions if DG closes above $58.00. 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.
* do NOT buy calls if DG closes above $58.00 *

BUY the 2014 Jan $60 call (DG1418a60)

- or -

BUY the 2015 Jan $70 call (DG1517a70)

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


Fluor Corp. - FLR - close: 63.43

Comments:
09/01/13: FLR had a rough week with shares falling the last four days in a row. Shares are off more than three points from Monday's close near $66.50. If FLR does not recover soon we will likely drop it as a candidate. Let's give it another week and then re-evaluate.

Earlier Comments:
Shares were hovering below resistance near the $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)

- or -

BUY the 2015 Jan $75 call (FLR1517a75)

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


General Electric - GE - close: 23.14

Comments:
09/01/13: I am throwing in the towel on our GE candidate. It is possible that shares might find support near $23 and its rising 200-dma. Unfortunately the current trend is down with GE off five out of the last six weeks. I will probably keep GE on my radar screen merely because it's such a market bellwether. However, tonight we are removing GE as an active candidate.

Trade did not open.

09/01/13 removed from the watch list
Trigger was a close above $25.25

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


Harley-Davidson - HOG - close: 59.98

Comments:
09/01/13: Shares of HOG continue to show relative strength. Traders bought the dip near its short-term moving averages last week and now HOG is back to testing resistance near $60.00.

I am suggesting we wait for HOG to close above $60.50 and then buy calls the next day with a stop loss at $56.75. However, I am putting a limit on this entry point. Do not open positions if HOG closes above $62.00. More aggressive traders could an intraday trigger instead waiting for a close above $60.50. If triggered our target is $69.00.

NOTE: The broader market still looks weak. Investors may want to start with small positions first and then build up to a normal position size later.

Breakout trigger: Wait for HOG to close above $60.50
Then buy calls the next day. Stop loss @ 56.75.
* do NOT launch positions if HOG closes above $62.00. *

BUY the 2014 Jan $65 call (HOG1418a65) current ask $1.77

- or -

BUY the 2015 Jan $70 call (HOG1517a70) current ask $3.95

Originally listed on the Watch List: 08/25/13


Michael Kors Holdings - KORS - close: 74.09

Comments:
09/01/13: Any worries about a slowing consumer are not affecting KORS. The stock has continued to rally and shares hit new all-time highs this past week. We still do not want to chase it in spite of the relative strength. KORS is flirting with a long-term trend line of higher highs. Considering the strong potential for more market volatility in September I'd rather wait for a correction in KORS.

Earlier Comments:
Broken resistance near $65.00 should be new support. I am suggesting we buy calls if KORS can trade down to $66.00. We'll start with a stop loss at $62.00 but more aggressive traders may want to put their stop below the $60.00 mark instead. Our bullish target to exit the 2014 calls is $74.50. Our target to exit the 2015 calls is $84.50. Currently the point & figure chart is bullish with an $82 target.

Buy-the-Dip trigger: $66.00

BUY the 2014 Jan $70 call (KORS1418a70)

- or -

BUY the 2015 Jan $75 call (KORS1517a75)

Originally listed on the Watch List: 08/18/13


NVIDIA Corp. - NVDA - close: 14.75

Comments:
09/01/13: The profit taking in NVDA has been relatively mild. It is worth noting that NVDA is down four days in a row and seems to have found new short-term resistance at its 10-dma. We are still on the sidelines and waiting for a breakout higher.

Earlier Comments:
Due to NVDA's recent volatility I am labeling this a more aggressive, higher-risk trade and thus suggest we use smaller positions to limit our risk. The suggested entry point is to wait for NVDA to close above $15.50 and then buy calls the next day with a stop loss at $14.25. Our target to exit the 2014 calls is $18.00. Our target to exit the 2015 calls is $19.75. Currently the point & figure chart is bullish and forecasting at $23 target.

Breakout trigger: Wait for a close above $15.50
then buy calls the next morning. Start with a stop at $14.25.

BUY the 2014 Jan $16 call (NVDA1418a16)

- or -

BUY the 2015 Jan $17 call (NVDA1517a17)

Originally listed on the Watch List: 08/18/13


Pfizer Inc. - PFE - close: 28.21

Comments:
09/01/13: I cautioned readers last week that we might see PFE decline toward technical support at its 200-dma. Sure enough that's where PFE fell to midweek. This stock is testing its long-term trend line of support dating back to 2011. I am tempted to buy alls here and just use a stop loss at $27.45 or maybe a stop at $26.90. However, concerns about the broader market with all the potential challenges we face in September are holding me back. I'd rather stay on the sidelines and watch than jump in too early ahead of what could be a very volatile month in September. For now our plan is unchanged.

Earlier Comments:
I am 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.

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: 77.89

Comments:
09/01/13: It has been an ugly three weeks for PG. The stock has retreated from resistance near the $82 area. This past week found PG testing support near $76 and its 200-dma. It's very unlikely that we will see PG hit our suggested entry point at $83.00 any time soon so we're removing PG as a watch list candidate.

Trade did not open.

09/01/13 removed from the watch list. Trade did not open.
suggested entry was a close above $83.00

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


Constellation Brands - STZ - close: 54.25

Comments:
09/01/13: The recent profit taking in shares of STZ has been pretty mild. The stock was hitting new all-time highs just a week ago. I don't see any changes from my earlier comments.

Earlier Comments:
I am suggesting we wait for STZ to close above $56.25 a share. If that trigger is met we can buy calls the next day. I am suggesting a wide stop loss at $49.95 but more conservative types may want to use a stop closer to the $53.00 level. Our long-term target is the $65-70 zone.

Breakout trigger: Wait for STZ to close above $56.25
Then buy calls the next day. Stop loss @ 49.95.

BUY the 2014 Jan $60 call (STZ1418a60)

- or -

BUY the 2015 Jan $65 call (STZ1517a65)

Originally listed on the Watch List: 08/25/13


VeriSign, Inc. - VRSN - close: 47.99

Comments:
09/01/13: VRSN is another stock that has seen a four-day plunge lower. Shares flirted with a bullish breakout past resistance at $50.00 on Monday but there was no follow through. Now shares are down four days in a row and breaking down below their 30-dma. If this weakness continues we will likely drop VRSN as a candidate. Let's give it another week and see how it performs.

Earlier Comments:
I am suggesting we wait for VRSN to close above $50.25 and then buy calls the next day. More aggressive traders may want to jump in on an intraday trade at $50.25 because VRSN has above average short interest and a breakout past $50.00 could spark some short covering. If VRSN meets our entry requirement I am suggesting a stop loss at $47.40. Our target to exit the 2014 calls is $57.50. Our target to exit the 2015 calls is $64.50. Currently the point & figure chart is bullish with a $76 target.

Breakout trigger: Wait for a close above $50.25
then buy calls the next morning. Start with a stop at $47.40.

BUY the 2014 Jan $55 call (NVDA1418a55)

- or -

BUY the 2015 Jan $55 call (NVDA1517a55)

Originally listed on the Watch List: 08/18/13


Yum! Brands - YUM - close: 70.02

Comments:
09/01/13: Shares of YUM have also suffered a painful three-week correction lower. The stock failed at resistance near $75.00 in early August. Since then we've seen it breakdown below several layers of potential support. It is unlikely that YUM will hit our suggested entry point (a close over $75.25) any time soon. Therefore we are removing YUM as an active watch list candidate.

Trade did not open.

09/01/13 removed from the watch list. Trade did not open.
suggested entry was a close over $75.25

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