New Watch List Entries

ATI - Allegheny Tech.

QCOM - QUALCOMM Inc.


Active Watch List Candidates

AVGO - Avago Technologies

CBI - Chicago Bridge & Iron

DKS - Dick's Sporting Goods

DLTR - Dollar Tree Inc.

FCX - Freeport McMoRan

HP - Helmerich & Payne

NOC - Northrop Grumman

SBUX - Starbucks

WAG - Walgreen Co.


Dropped Watch List Entries

LVLT graduated to our active play list.



New Watch List Candidates:


Allegheny Technologies - ATI - close: 33.36

Company Info

ATI is in the industrial goods sector. The company manufactures specialty metals. The company last reported earnings on October 23rd and missed Wall Street's estimates for both the top and bottom line numbers. Management offered cautious guidance going forward but that didn't really spook the stock price. Shares of ATI appear to have built a very significant bottom over the last year. Investors might be assuming that all the bad news is priced in and the worst is behind it for ATI. The point and figure chart has turned bullish and is forecasting a long-term target of $51.00.

Currently ATI is hovering below major resistance at the $34.00 level. I am suggesting we buy calls if ATI can close above $34.50. Wait for it to close above this level and buy calls the next day with a stop loss at $30.40. Our long-term target is $44.00.

Breakout trigger: Wait for a close above $34.50
then buy calls the next morning with a stop loss @ 30.40

BUY the 2015 Jan $40 call (ATI1517a40) current ask $2.45

Chart of ATI:

Originally listed on the Watch List: 11/03/13


QUALCOMM Inc. - QCOM - close: 69.90

Company Info

QCOM is in the technology sector. The company manufactures digital telecommunications equipment. Part of their product line are chips for smartphones. The stock peaked in September with shares struggling with resistance near the $70 level. Since then QCOM has already seen a correction back toward $65.00 and rebounded. The point and figure chart is bullish and is forecasting a long-term target of $93.00.

If QCOM can breakout past resistance at $70.00 it will look like a buy. The intraday high on September 10th was $70.37. I am suggesting we wait for QCOM to close above $70.50 and buy calls the next day. However, I am putting a limit on this trade. We do not want to open positions if we see QCOM close above $72.00. That could happen. QCOM is due to report earnings on Wednesday, November 6th, after the closing bell. Shares could spike higher on a better than expected earnings announcement. We want to see QCOM close inside the $70.50-72.00 zone and buy calls the next morning with a stop loss at $66.75. If triggered our long-term target is $85.00.

More conservative traders may just want to wait until Thursday or Friday and see how QCOM fares after its earnings results come out.

Breakout trigger: Wait for QCOM to close above $70.50 (see details)
if triggered start with a stop loss at $66.75

BUY the 2015 Jan $75 call (QCOM1517a75) current ask $4.45

Chart of QCOM

Originally listed on the Watch List: 11/03/13


Active Watch List Candidates:



Avago Technologies - AVGO - close: 44.72

Comments:
11/03/13: We have been expecting AVGO to correct lower and it definitely looks like the correction has started. Shares are now down two weeks in a row. Tonight I am adjusting our entry trigger again. We want to buy calls on a dip at $43.00. If triggered we're suggesting a stop loss at $39.40.

Buy-the-Dip trigger: $43.00, stop loss @ 39.40

BUY the 2015 Jan $50 call (AVGO1517a50) 11/03/13 adjust trigger to $43.00
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: 73.83

Comments:
11/03/13: We were expecting CBI to see some profit taking after the company reported earnings. The company reported bottom line results that were in-line with estimates while revenues beat expectations. Shares initially spiked higher but there was no follow through. I am still expecting CBI to see some profit taking.

We're suggesting a trigger to buy calls at $68.50. If triggered use a stop loss at $63.75. 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)

11/03/13 adjust the stop loss to $63.75
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: 53.56

Comments:
11/03/13: We were about to give up on DKS but shares finally started moving higher. DKS actually displayed some relative strength last week and once again looks poised to breakout past major resistance near the $54.00 level.

NOTE: More conservative investors may want to wait until after we see how the market reacts to DKS' earnings results before initiating positions. There is no date set but DKS will likely announce in mid November.

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: 58.17

Comments:
11/03/13: No surprises here. DLTR retreated from resistance near $60.00. Currently the plan is to buy calls on a dip at $56.25 with a stop loss at $52.40. More conservative investors could wait and hope for a dip closer to $55.00 before initiating positions.

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: 36.78

Comments:
11/03/13: FCX also hit some profit taking last week. I don't see any changes from my previous comments.

Broken resistance at $35.00 should be new support. We want to buy calls on a dip at $35.25. If triggered our long-term target is $42.50.

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


Helmerich & Payne, Inc. - HP - close: 77.43

Comments:
11/03/13: HP hit new all-time highs last week but Wednesday's session could be a short-term top. We are still expecting a pullback. 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)

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


Northrop Grumman - NOC - close: 108.12

Comments:
11/03/13: NOC spent the week consolidating sideways. It is interesting that shares broke out to a new high on Friday morning and then reversed. This could signal a short-term top. There is no change from my prior comments.

We want to wait for a correction and buy calls on a dip 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)

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


Starbucks - SBUX - close: 80.37

Comments:
11/03/13: We were hoping that SBUX would see some post-earnings report profit taking and fall toward its 50-dma. That didn't happen. Earnings results were in-line with expectations. Shares initially spiked down on the news but traders quickly bought the dip. SBUX actually tagged a new all-time high on an intraday basis.

We do not want to chase it here but I will adjust our buy-the-dip entry point from $76.00 to $77.00.

Our long-term target is $98.00.

Buy-the-Dip trigger: $77.00, stop loss @ 73.75

BUY the 2015 Jan $85 call (SBUX1517a85)

11/03/13 adjust buy-the-dip entry from $76 to $77.00

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


Walgreen Co. - WAG - close: 60.52

Comments:
11/03/13: WAG has continued to show relative strength. Friday's session outperformed the market with a +2.1% gain and a bullish breakout over potential round-number resistance at $60.00. This is also a new all-time closing high for WAG. I still don't want to chase the stock here, not after a five-week rally. Let's give WAG another week and then re-evaluate our entry plan.

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