New Watch List Entries

CBI - Chicago Bridge & Iron

DKS - Dick's Sporting Goods


Active Watch List Candidates

AVGO - Avago Technologies

DD - E.I. du Pont

DLTR - Dollar Tree Inc.

FCX - Freeport McMoRan

HAS - Hasbro Inc.

WAG - Walgreen Co.


Dropped Watch List Entries

..None..



New Watch List Candidates:


Chicago Bridge & Iron - CBI - close: 70.47

Company Info

As a company, CBI is almost 125 years old. Through the decades they have grown into a global giant for energy infrastructure construction projects. The stock spent most of the summer consolidating sideways inside a huge pennant pattern. Shares broke out from this consolidation in early September. A recent string of positive headlines regarding new contract wins has helped fuel CBI to new all-time highs.

We do not want to chase it here. I am suggesting a buy-the-dip trigger to buy calls at $66.00 since broken resistance near $65.00 should be support. Now there's no guarantee that CBI is going to produce this desired pullback but if it does, we want to be ready to take advantage of it.

If triggered at $66.00, we will start with a stop loss at $59.50. Our long-term target for the 2015 calls is $84. Our long-term target for the 2016 calls $94.

Buy-the-Dip trigger: $66.00

BUY the 2015 Jan $75 call (CBI1517a75) current ask $7.20

- or -

BUY the 2016 Jan $80 call (CBI1615a80) current ask $9.60

Chart of CBI:

Originally listed on the Watch List: 10/06/13


Dick's Sporting Goods - DKS - close: 53.27

Company Info

DKS is a sporting goods chain with over 525 stores in 44 states. The stock has been consolidating sideways inside the $45-54 trading range for about a year and a half. The most recent bounce off the bottom of the range has produced a five-week rally. Now DKS is sitting just below major resistance. A breakout here could launch a significant move higher. The point & figure chart is already bullish and forecasting at $71 target.

DKS has failed at $54.25 more than once. I am suggesting we wait for DKS to close above $54.50 and then buy calls the next day with a stop loss at $49.95. Please note that I am putting a limit on this entry point. We do not want to initiate positions if we see DKS close above $56.50 so I'm giving the stock a $2.00 window for us to launch positions.

Buy-the-Dip trigger: Wait for DKS to close above $54.50
then buy calls the next day. use an initial stop at $49.95.

BUY the 2014 Jan $55.50 call (DKS1418a55.5) current ask $1.85

- or -

BUY the 2015 Jan $60 call (DKS1517a60) current ask $3.60

Chart of DKS:

Originally listed on the Watch List: 10/06/13


Active Watch List Candidates:



Avago Technologies - AVGO - close: 43.50

Comments:
10/06/13: Gains were limited but AVGO did close at a new all-time high on Friday. The stock is up four weeks in a row and up six out of the last seven weeks. I would rather not chase it here.

Earlier Comments:
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)

- or -

BUY the 2015 Jan $45 call (AVGO1517a45)

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


E.I. du Pont - DD - close: 58.65

Comments:
10/06/13: DD posted a minor decline for the week thanks to a big bounce on Friday. The stock is less than two points from its 52-week high so we're not giving up yet. Our entry strategy is unchanged.

We want to wait for DD to close above $60.75 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 $60.75
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


Dollar Tree, Inc. - DLTR - close: 59.21

Comments:
10/06/13: It was a bullish week for DLTR. Investors bought the dip on Monday, Sept. 30th and shares rebounded to a new all-time high.

I do not see any changes from my prior comments.

Earlier Comments:
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)

- or -

BUY the 2015 Jan $65 call (DLTR1517a65)

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


Freeport-McMoRan - FCX - close: 33.49

Comments:
10/06/13: FCX hit $32.33 last Monday at its lows. Traders bought the dip again last Tuesday at $32.39. We may need to rethink our buy-the-dip trigger at $32.00 but we're not giving up yet. For now the strategy is unchanged.

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


Hasbro Inc. - HAS - close: 47.43

Comments:
10/06/13: HAS spent most of the week consolidating sideways above short-term technical support at its simple 50-dma. If the stock doesn't improve soon we are likely to drop it as a candidate.

Earlier Comments:
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)

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


Walgreen Co. - WAG - close: 55.79

Comments:
10/06/13: WAG hit new all-time highs on Thursday last week but we do not want to chase it. I don't see any changes from my earlier comments. We want to wait and buy calls on a dip at $52.25.

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

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