Editor's Note:

Our watch list had a successful week. CRUS, DD, DIS, and JDSU all graduated to our play list.



New Watch List Entries

HP - Helmerich & Payne

NOC - Northrop Grumman

SBUX - Starbucks


Active Watch List Candidates

AVGO - Avago Technologies

CBI - Chicago Bridge & Iron

DKS - Dick's Sporting Goods

DLTR - Dollar Tree Inc.

FCX - Freeport McMoRan

LVLT - Level 3 Communications

WAG - Walgreen Co.


Dropped Watch List Entries

CRUS, DD, DIS, and JDSU all graduated to the active play list.



New Watch List Candidates:


Helmerich & Payne, Inc. - HP - close: 76.57

Company Info

HP is in the oil and gas drilling and exploration industry. As the global economy tries to recover it should mean stronger demand for energy. That is lifting the oil stocks. HP is trading near multi-year highs. More aggressive investors might want to consider buying calls on a breakout past short-term resistance near $78.00. I am suggesting we wait and buy calls on a dip at the $72.25 mark. if triggered we'll start with a stop loss at $67.75. Our long-term target is $85.00.

NOTE: HP is scheduled to report earnings on November 14th.

Buy-the-Dip trigger: $72.25, stop loss 67.75

BUY the 2015 Jan $80 call (HP1517a80) current ask $7.40

Chart of HP:

Originally listed on the Watch List: 10/27/13


Northrop Grumman - NOC - close: 108.37

Company Info

Many of the large defense contractors have been standout performers this year. The sequestration cuts did not curb their share price appreciation and investors seem very bullish on the industry. Stocks like BA, GD, and NOC are all hitting new all-time or multi-year highs.

NOC looks interesting as shares recently broke through round-number resistance at the $100 level. On a short-term basis the stock is overbought so we would not chase it here. Tonight we're listing a buy-the-dip trigger at $102.25. If triggered I am suggesting a stop loss at $97.75. Our long-term target is $118.00. FYI: The Point & Figure chart is bullish with a $160 target.

Buy-the-Dip trigger: $102.25, stop @ 97.75

BUY the 2015 Jan $110 call (NOC1517a110) current ask $7.60

Chart of NOC:

Originally listed on the Watch List: 10/27/13


Starbucks - SBUX - close: 79.96

Company Info

The ubiquitous coffee giant SBUX has been a consistent winner for bullish investors over most of 2013. Shares hit new all-time highs this past week before the stock hit some profit taking. On a short-term basis SBUX looks poised to rally from current levels. However, the company is due to report earnings on October 30th. Shares could see some post-earnings profit taking. If that occurs then we want to be ready to take advantage of it and buy SBUX near support. The rising 50-dma has been support for several months.

I am suggesting a buy-the-dip trigger at $76.00. If triggered we'll start with a stop loss at $73.75. Our long-term target is $98.00.

Buy-the-Dip trigger: $76.00, stop loss @ 73.75

BUY the 2015 Jan $85 call (SBUX1517a85) current ask $6.65

Chart of SBUX:

Originally listed on the Watch List: 10/27/13


Active Watch List Candidates:



Avago Technologies - AVGO - close: 45.63

Comments:
10/27/13: AVGO tagged new all-time highs on Monday but profit taking knocked off a couple of points midweek. The overall trend is still higher although last week's performance might suggest a potential top. We do not want to chase it here. I don't see any changes from my earlier comments.

Use a buy-the-dip trigger at $43.50. If triggered we're suggesting a stop loss at $39.40. Please note that I am eliminating the 2014 calls. We'll only use the 2015s.

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

BUY the 2015 Jan $50 call (AVGO1517a50) 10/27/13 removed the 2014 call
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: 74.52

Comments:
10/27/13: CBI continues to show strength and eked out another gain for the week. That ups the stock's winning streak to seven weeks in a row. I suspect that CBI is going to see some profit taking after they announce earnings on October 29th. We're crossing our fingers for a post-earnings pullback.

We're suggesting a trigger to buy calls at $68.50. 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


Dick's Sporting Goods - DKS - close: 52.46

Comments:
10/27/13: DKS briefly traded below short-term support near $51.00 before bouncing back. Currently we are on the sidelines and waiting for DKS to breakout and close above major resistance. There is no change from my prior comments although I have eliminated the 2014 call.

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 2015 Jan $60 call (DKS1517a60)

10/27/13 removed the 2014 call.

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


Dollar Tree, Inc. - DLTR - close: 59.70

Comments:
10/27/13: DLTR spent the week consolidating sideways below resistance at the $60.00 level. More aggressive investors may want to consider buying calls on a breakout. I am suggesting we wait for a correction. Currently the plan is to buy calls on a dip at $56.25 with a stop loss at $52.40.

NOTE: I am removing the 2014 call.

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 2015 Jan $65 call (DLTR1517a65)

10/27/13 removed the 2014 call
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: 37.44

Comments:
10/27/13: Wow! It was a bullish week for FCX with shares adding +7.3% and breaking through resistance near $35.00. The rally was fueled by its earnings news. FCX reported earnings on October 22nd and beat both the top and bottom line estimates. Management their raised their guidance.

The stock looks short-term overbought. Broken resistance at $35.00 should be new support. We will adjust our entry point strategy. First, I am removing the 2014 calls. Next we will adjust our buy-the-dip trigger to $35.25 and adjust the stop loss to $32.25. Finally we'll adjust the option strike to the 2015 January $39 call ($40s are not available). If triggered our long-term target is $42.50.

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: $35.25, small positions!
start with a stop loss at $32.25.

BUY the 2015 Jan $39 call (FCX1517a39)

10/27/13 strategy update: removed the 2014 calls
adjust the buy-the-dip trigger to $35.25 and the stop to $32.25.
adjust the option strike to the 2015 Jan $39 call

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


Level 3 Communications - LVLT - close: 26.91

Comments:
10/27/13: It was a down week for LVLT. The stock failed near $28.00 on Monday and traders were selling the bounce on Friday. We're going to wait and see how the market reacts to LVLT's earnings before adjusting our strategy or removing LVLT as a candidate. The company is scheduled to report earnings on October 30th.

Earlier Comments:
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.

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)

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


Walgreen Co. - WAG - close: 59.19

Comments:
10/27/13: WAG slowly drifted higher all week. I don't see any changes from my prior comments except that I am removing the 2014 calls.

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

BUY the 2015 Jan $65 call (WAG1517a65)

10/27/13 removed the 2014 calls
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