Editor's Note:

Last week was very successful for our watch list. We saw six candidates graduate to active plays.



New Watch List Entries

INTC - Intel Corp.

KMX - CarMax Inc.


Active Watch List Candidates

DD - E.I. du Pont

FLR - Fluor Corp.

NVDA - NVIDIA Corp.

SJM - The J. M. Smucker Co.

VRSN - VeriSign, Inc.


Dropped Watch List Entries

MAKO, DECK, DG, HOG, MDVN and STZ all graduated to the play list.
KORS and PFE have been removed.



New Watch List Candidates:


Intel Corp. - INTC - close: 22.67

Company Info

Semiconductor giant Intel has been underperforming its peers in the chip sector and the broader NASDAQ for months. Yet it looks like INTC has finally found support near $22.00 and its long-term trend of higher lows. More importantly this past week has seen INTC breakout past its three-month trend of lower highs (bullish breakout). We don't want to jump in just yet. INTC still has some resistance near $23 and its 50-dma.

I am suggesting we wait for INTC to close above $23.15. If that occurs we can buy calls the next morning with a stop loss at $21.75 (just under the August low). Our long-term target is the $26-29 zone.

Breakout trigger: Wait for INTC to close above $23.15
then buy calls the next morning, stop loss @ 21.75

BUY the 2014 Jan $24 call (INTC1418a24) current ask $0.67

- or -

BUY the 2015 Jan $25 call (INTC1517a25) current ask $1.37

Chart of INTC:

Originally listed on the Watch List: 09/08/13


CarMax Inc. - KMX - close: 51.21

Company Info

KMX is in the auto dealership business. If you haven't heard, car sales are on fire. Auto sales are surging as Americans replace older vehicles that they have been holding on to. Big picture it can be seen as a vote of confidence by consumers to upgrade their car (which probably raises their car payment). The latest data showed that U.S. sales of new cars hit an annual pace of 16.09 million. That's almost a six-year high.

What you may find interesting here is that KMX focuses on used cars, not new cars. The good news is that based on KMX's latest earnings report, the pace of used car sales is picking up as well. Shares have spent the last few weeks consolidating below resistance at the $50.00 level. This past week KMX broke out resistance at $50 to hit new all-time highs.

More aggressive investors may want to buy puts now. I am suggesting we wait and buy calls on a dip at $50.00. If triggered we'll try and limit our risk with a stop loss at $46.40. Our long-term target is $59.00

Buy-the-Dip trigger: $50.00

BUY the 2014 Jan $55 call (KMB1418a55) current ask $2.05

Chart of KMX:

Originally listed on the Watch List: 09/08/13


Active Watch List Candidates:



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

Comments:
09/08/13: Shares of DD finally bounce after a four-week correction lower. If the rebound does not continue this week then we'll likely drop it as a candidate.

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


Fluor Corp. - FLR - close: 64.58

Comments:
09/08/13: FLR managed a little bit of an oversold bounce this past week. I am concerned that Friday's performance looks like a short-term bearish reversal and potentially a new lower high. I'm willing to wait and see if FLR moves lower (and we'll drop it) or if it rallies back toward resistance near $67.

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


Michael Kors Holdings - KORS - close: 75.70

Comments:
09/08/13: KORS is still defying gravity with another weekly gain. This stock is up three weeks in a row and up six out of the last seven weeks. We have been waiting for a correction. Shares are currently hovering near long-term resistance (see chart below). Thus we'd rather not chase it here. I am removing KORS from the watch list tonight but I would definitely keep it on your radar screen. We'll certainly keep an eye on it for a potential entry point.

Trade did not open

09/08/13 removed from the newsletter, trigger was a dip to $66.00.

Chart of KORS

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


NVIDIA Corp. - NVDA - close: 14.88

Comments:
09/08/13: NVDA is quietly churning sideways in the $14.75-15.00 zone. 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: 28.28

Comments:
09/08/13: I am giving up on PFE. Shares continue to trade near their long-term up trend of higher lows. More aggressive investors could buy calls now and just use a stop loss under the 200-dma (or probably better to use a stop under $27.50 or even under $27.00). Given the potential volatility for the market in September we're going to remove PFE as a candidate. I would keep it on your radar screen. A rally back above $30.00 could be interesting.

Trade did not open.

09/08/13 removed from the watch list. trade did not open.

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


The J. M. Smucker Company - SJM - close: 105.99

Comments:
09/08/13: Shares of SJM are virtually unchanged for the week (about 15 cents). The stock is hovering between technical support at its 100-dma (and the $105 level) and resistance near $108. We're expecting a rebound from support at $105 but shares really didn't move last week when the rest of the market did. That's troubling. At the moment our plan is unchanged.

Earlier Comments:
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 $1.60

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


VeriSign, Inc. - VRSN - close: 49.31

Comments:
09/08/13: VRSN was up every day last week. Shares are once again approaching significant resistance near the $50.00 level.

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