New Watch List Entries

AVGO - Avago Technologies

DLTR - Dollar Tree Inc.

HAS - Hasbro Inc.


Active Watch List Candidates

DD - E.I. du Pont

FCX - Freeport McMoRan

KMX - CarMax Inc.

WAG - Walgreen Co.


Dropped Watch List Entries

VRSN graduated to our active play list.



New Watch List Candidates:


Avago Technologies - AVGO - close: 41.62

Company Info

Apple Inc. (AAPL) has had a rough month as investors sold the news of its latest iPhone announcement a couple of weeks ago. It's a different story for some of AAPL's parts suppliers. AVGO is in the semiconductor industry and they make a number of chips, RF devices and equipment. AVGO happens to be a parts supplier for AAPL's new iPhone 5.

This past week has seen AVGO breakout past major resistance near the $40.00 level and hit new all-time highs. We want to be ready to buy the dip when shares pullback and retest the $40 area. I am suggesting a buy-the-dip entry point at $40.00 with a stop loss at $37.75. If triggered our long-term target is $45.00 for the 2014 January calls and $48.50 for the 2015 calls. FYI: The point & figure chart is bullish with a $49 target.

Buy-the-Dip trigger: $40.00, stop loss @ 37.75

BUY the 2014 Jan $42.50 call (AVGO1418a42.5) current ask $2.35

- or -

BUY the 2015 Jan $45 call (AVGO1517a45) current ask $4.40

Chart of AVGO:

Originally listed on the Watch List: 09/22/13


Dollar Tree, Inc. - DLTR - close: 58.00

Company Info

As the U.S. economy creeps along in the +2% growth range there has been growing concerns over the American consumer. Fortunately for DLTR, consumers seem to be flocking to the deep discount stores. Wall Street seems optimistic on DLTR's growth and DLTR management just recently announced a new $2 billion stock buyback program.

Shares of DLTR recently broke out past resistance near $55.00 and tagged new all-time highs. We do not want to chase it here. I suspect we will see DLTR retest $55 as support. I am suggesting a buy-the-dip trigger at $55.25 with a stop loss at $51.50. Our long-term target is the $65 area. FYI: The point & figure chart is bullish with a $78 target.

Buy-the-Dip trigger: $55.25, stop loss @ 51.50

BUY the 2014 Jan $60 call (DLTR1418a60) current ask $2.25

- or -

BUY the 2015 Jan $65 call (DLTR1517a65) current ask $3.90

Chart of DLTR:

Originally listed on the Watch List: 09/22/13


Hasbro Inc. - HAS - close: 48.79

Company Info

Hasbro has been making toys and games for kids since 1923. While many are worried about a weaker U.S. consumer there doesn't seem to be any fears that parents will stop buying stuff for their kids. That has helped push HAS toward its all-time highs near resistance at the $50.00 level (the December 2010 high is $50.17).

HAS looks like it has been consolidating for a breakout for the last five months. I am suggesting we wait for HAS to close above $50.25 and then buy calls the next morning with a stop loss at $46.75. However, I am putting a condition on this entry point. HAS could surge on a breakout past $50.00. We do not want to open positions if we see HAS close above $51.25. Our long-term target is $59.00.

Breakout trigger: Wait for a close above $50.25
then buy calls the next day. Yet do not open positions if HAS closes above $51.25.

BUY the 2015 Jan $55 call (HAS1517a55) current ask $2.30

Chart of HAS:

Originally listed on the Watch List: 09/22/13


Active Watch List Candidates:



E.I. du Pont - DD - close: 59.42

Comments:
09/22/13: Our DD trade almost opened this past week. The stock managed to breakout past resistance at $60.00 but it closed at $60.44 on Wednesday, following the FOMC meeting. That didn't qualify as an entry point. Shares hit a new ten-year high on Thursday but the market's widespread profit taking pulled DD back below $60 by week's end.

Looking more closely at the action in DD this past week I want to adjust our entry point strategy. Wait for DD to close above $60.75 instead of $60.50.

If DD does close above $60.75 we can 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 $60.75
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)

09/22/13 adjust entry: wait for a close above $60.75
instead of a close above $60.50

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


Freeport-McMoRan - FCX - close: 33.87

Comments:
09/22/13: Thus far FCX has seen strong gains in September with a rally from $30 to $35. Yet the three-week run might be over. This stock reversed at resistance near $35.00 on Thursday. I am still expecting a pullback toward $32.00, which should be new support.

Earlier Comments:
I am suggesting we launch small bullish positions if FCX trades at $32.00 again. We'll try and limit our risk with a stop loss at $29.45. Our long-term target is the $38-40 zone but we'll adjust it as the play progresses.

Buy-the-Dip trigger: $32.00, small positions!
start with a stop loss at $29.45.

BUY the 2014 Jan $35 call (FCX1418a35)

- or -

BUY the 2015 Jan $34 call (FCX1517a34)

Originally listed on the Watch List: 09/15/13


CarMax Inc. - KMX - close: 51.19

Comments:
09/22/13: KMX almost hit our entry point on Wednesday but the stock bounced near $50.30. We're not giving up yet. KMX managed a small gain for the week but the market's rally looks tired and we could see KMX retesting the $50.00 level soon. I don't see any changes from my earlier comments.

NOTE: KMX is scheduled to report earnings on September 24th. Cautious investors may want to wait until after we see how the market reacts to KMX's results before launching positions, regardless of if this stock hits our suggested entry trigger.

Earlier Comments:
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)

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


Walgreen Co. - WAG - close: 55.52

Comments:
09/22/13: WAG continues to show relative strength. The stock posted nine gains in a row until Friday's pullback ended the streak. We still do not want to chase it higher. However, we will adjust our buy-the-dip entry point from $51.50 to $52.25. We'll adjust the stop loss up to $48.40.

Earlier Comments:
Our target to exit the 2014 calls is $59.50. Target to be determined for the 2015 calls.

Please note that more conservative investors may want to wait a couple of weeks before considering new positions. WAG is scheduled to report earnings on October 1st. You might want to wait and see how the market chooses to interpret WAG's results before initiating positions.

Buy-the-Dip trigger: $52.25, use a stop at $48.40

BUY the 2014 Jan $55 call (WAG1418a55)

- or -

BUY the 2015 Jan $60 call (WAG1517a60)

09/22/13 adjust entry strategy: move the trigger to $52.25
adjust the stop loss to $48.40
(previous trigger and stop was $51.50 & 47.40)

Originally listed on the Watch List: 09/15/13