Editor's Note:

We are adding three new candidates tonight. Plus I have adjusted the entry point strategy on multiple candidates.



New Watch List Entries

CRUS - Cirrus Logic

JDSU - JDS Uniphase

LVLT - Level 3 Communications


Active Watch List Candidates

AVGO - Avago Technologies

CBI - Chicago Bridge & Iron

DD - E.I. du Pont

DIS - The Walt Disney Co

DKS - Dick's Sporting Goods

DLTR - Dollar Tree Inc.

FCX - Freeport McMoRan

WAG - Walgreen Co.


Dropped Watch List Entries

NOV graduated to our active play list.



New Watch List Candidates:


Cirrus Logic - CRUS - close: 24.70

Company Info

CRUS is in the technology sector. They are a fabless semiconductor company. If you're looking for a way to play Apple Inc. (AAPL) but don't want to trade a $500 stock then consider CRUS. They make parts for smartphones. CRUS recently disclosed that AAPL accounted for 82% of its sales in 2013.

Shares of CRUS have been consistently building on a bullish trend of higher lows. Now the stock is poised to breakout past significant resistance at the $25.00 level. I am suggesting a trigger to buy calls at $25.50. This is an intraday trigger, not an end of day (wait for it to close above) trigger.

If triggered at $25.50 then we'll start with a stop loss at $22.40. Please note that CRUS is scheduled to report earnings on October 29th. More conservative investors may want to wait and see the results and how the market reacts to CRUS' report before initiating positions. If triggered our long-term target is $32.50.

Breakout trigger: $25.50, stop loss @ 22.40

BUY the 2015 Jan $30 call (CRUS1517a30) current ask $3.90

Chart of CRUS:

Originally listed on the Watch List: 10/20/13


JDS Uniphase - JDSU - close: 15.55

Company Info

JDSU is another technology-sector stock. The company manufactures communication equipment and optical products for networking gear. The stock has been stuck in the $12.50-15.50 zone for months. Recently shares have started picking up steam and now JDSU is poised for a major breakout higher.

Wait for JDSU to close above $15.75. If that occurs we can buy calls the next day with a stop loss at $14.40. Our long-term target is $20.00.

Please note that JDSU is scheduled to report earnings on October 30th. More conservative investors may want to wait and see the results and how the market reacts to JDSU's report before initiating positions.

FYI: The point & figure chart is bullish with a $20 target.

Breakout trigger: Wait for JDSU to close above $15.75,
then buy calls the next day with a stop at $14.40

BUY the 2015 Jan $20 call (JDSU1517a20) current ask $1.28

Chart of JDSU:

Originally listed on the Watch List: 10/20/13


Level 3 Communications - LVLT - close: 28.05

Company Info

LVLT is also in the technology sector. The company provides integrated communication services. The latest earnings report back in July was a disappointment but the stock barely reacted. Since then shares have accelerated higher. It seems all the bad news has been priced in. Investors are betting on some improvement. LVLT has built a huge base over the last couple of years. Now the stock is trying to breakout past resistance near the $28.00 level. The October 4th high was $28.72. I am suggesting we wait for LVLT to close above $29.00 and buy calls the next day with a stop loss at $25.75. If triggered our long-term target is $39.00. Coincidentally the point & figure chart is forecasting at $39 target.

Please note that LVLT is scheduled to report earnings on October 30th. More conservative investors may want to wait and see the results and how the market reacts to LVLT's report before initiating positions.

Breakout trigger: Wait for LVLT to close above $29.00,
then buy calls the next day with a stop at $25.75

BUY the 2015 Jan $30 call (LVLT1517a30) current ask $3.90

Chart of LVLT:

Originally listed on the Watch List: 10/20/13


Active Watch List Candidates:



Avago Technologies - AVGO - close: 46.06

Comments:
10/20/13: A runaway stock market has lifted AVGO to new all-time highs. It is unlikely that we're going see this stock correct back toward $40 any time soon. I remain bullish on it. We will raise our buy-the-dip trigger to $43.50 and raise our stop loss to $39.40. I'm also raising the exit target for the 2014 calls to $49.50. The exit target on our 2015 call will be $54.00.

We are also adjust the option strikes to 2014 Jan $45 and 2015 Jan $50.

Buy-the-Dip trigger: $43.50, stop loss @ 39.40

BUY the 2014 Jan $45 call (AVGO1418a45)

- or -

BUY the 2015 Jan $50 call (AVGO1517a50) 10/20/13 adjust the buy-the-dip trigger to $43.50
adjust the stop loss to $39.40 & adjust the option strikes
adjust the 2014 exit target to $49.50
adjust the 2015 exit target to $54.00
10/13/13 adjust the buy-the-dip trigger from $40.00 to $40.50

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


Chicago Bridge & Iron - CBI - close: 74.44

Comments:
10/20/13: CBI also happens to be a runaway momentum stock. The stock is up six weeks in a row and very unlikely to hit our buy-the-dip trigger at $66.00 any time soon. I am raising our buy-the-dip trigger to $68.50. We'll adjust our stop loss to $62.40. CBI is due to report earnings on October 29th. If shares do not see a post-earnings pullback then we'll re-adjust our entry strategy again.

More aggressive traders may want to consider buying calls on a dip in the $70-71 zone instead.

Our long-term target for the 2015 calls is $84. Our long-term target for the 2016 calls $94.

Buy-the-Dip trigger: $68.50

BUY the 2015 Jan $75 call (CBI1517a75)

- or -

BUY the 2016 Jan $80 call (CBI1615a80)

10/20/13 adjust the buy-the-dip trigger to $68.50 from $66.00.
adjust the stop loss to $62.40

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


E.I. du Pont - DD - close: 59.62

Comments:
10/20/13: This could be an important week for shares of DD. The company reports earnings on October 22nd. If the stock doesn't show some improvement soon then we will likely drop it as a watch list candidate.

Earlier Comments:
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


The Walt Disney Co. - DIS - close: 67.15

Comments:
10/20/13: DIS spent most of the week bouncing along support at the $66.00 level. Shares closed Friday poised to test resistance near $68.00. There is no change from my earlier comments.

Earlier Comments:
We want to be ready if DIS can breakout past $68.00. I am suggesting we launch bullish positions if DIS can close above $68.05 but do not open positions if we see DIS close above $70.00 (we want to avoid buying a big spike higher or a gap open that's too high). If triggered with a close above $68.05 we'll start with a stop loss at $62.90. Our long-term target is $84.00.

FYI: DIS is due to report earnings on November 7th.

Breakout trigger: Wait for DIS to close above $68.05
buy calls the next day. use an initial stop at $62.90

BUY the 2015 Jan $75 call (DIS1517a75) current ask $3.20

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


Dick's Sporting Goods - DKS - close: 52.57

Comments:
10/20/13: Believe it or not DKS ended unchanged for the week. Traders bought the dip twice. It's a bit disappointing to see DKS not participate more with the market's rally but we're not giving up yet. There is no change from my prior comments.

Earlier Comments:
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)

- or -

BUY the 2015 Jan $60 call (DKS1517a60)

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


Dollar Tree, Inc. - DLTR - close: 59.24

Comments:
10/20/13: DLTR managed to tag new all-time highs this past week. Overall I don't see a lot of changes from my prior comments. However, we will adjust our buy-the-dip trigger from $55.25 to $56.25. We'll move the stop loss to $52.40.

Earlier Comments:
Our long-term target is the $65 area. FYI: The point & figure chart is bullish with a $78 target.

Buy-the-Dip trigger: $56.25, stop loss @ 52.40

BUY the 2014 Jan $60 call (DLTR1418a60)

- or -

BUY the 2015 Jan $65 call (DLTR1517a65)

10/20/13 adjust the trigger to $56.25 and the stop to $52.40

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


Freeport-McMoRan - FCX - close: 34.89

Comments:
10/20/13: FCX has rallied to resistance near $35.00. While a breakout past $35.00 could be used as a potential entry point I am unwilling to chase it. Not when FCX could sell-off on a disappointing earnings report. The company is due to report earnings on Tuesday morning, October 22nd. If shares do not see a correction lower then we will re-evaluate our entry point strategy next weekend.

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


Walgreen Co. - WAG - close: 58.59

Comments:
10/20/13: The bullish market environment has allowed WAG to soar to new all-time highs. I am still unwilling to chase it but we will adjust our entry point. Use a buy-the-dip trigger at $55.00 and we'll raise our suggested stop loss to $49.75. We will also adjust our option strikes higher and our exit targets.

I am suggesting a target to exit the 2014 calls is $64.50. Target to be determined for the 2015 calls.

Buy-the-Dip trigger: $55.00, use a stop at $49.75

BUY the 2014 Jan $60 call (WAG1418a60)

- or -

BUY the 2015 Jan $65 call (WAG1517a65)

10/20/13 adjust the buy-the-dip trigger to $55.00 and move the stop loss to $49.75. Plus we will adjust our option strikes higher.
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