New Watch List Entries

CZR - Caesars Entertainment

HD - Home Depot, Inc.

YUM - Yum! Brands Inc.


Active Watch List Candidates

ATI - Allegheny Tech.

C - Citigroup, Inc.

COP - ConocoPhillips

HP - Helmerich & Payne

SBUX - Starbucks

WAG - Walgreen Co.

WDC - Western Digital Corp.


Dropped Watch List Entries

COF and HFC have graduated to the active play list.



New Watch List Candidates:


Caesars Entertainment - CZR - close: 17.91

Company Info

CZR is in the services sector. The company owns over 50 casinos in seven countries. Overall domestic gambling revenues have been soft this past year. Yet the introduction of online gambling in the U.S. has revived interest in some of the gambling stocks. Online gambling in New Jersey just start this past week. CZR recently spun off Caesars Acquisition Co. (CACQ) to try and capture the online gambling business and allow investors a chance to participate. CZR still owns a 42% stake in CACQ.

CZR itself has struggled this year. The company recently reported earnings in late October that were a huge miss. Yet the terrible earnings news failed to have much of an impact on CZR's stock price, which was already down significantly from its mid September highs.

It would appear that the current softness in the U.S. gambling industry has been baked into CZR's share price. Shares found support near its rising 200-dma this past month. Now CRZ is on the rebound. The recent breakout past its 50-dma and the $20.00 mark is bullish. The point & figure chart has reversed as well and is now forecasting at $27.00 price target.

The high on Friday, Nov. 29th was $20.75. I am suggesting we wait for CZR to close above $21.00 and buy calls the next day. If triggered we'll start with a stop loss at $18.75. Our initial target is $26.00 but we'll adjust it as the play progresses.

Breakout trigger: Wait for a close above $21.00
then buy calls the next day with a stop loss at $18.75

BUY the 2015 Jan $25 call (CZR1517a25) current ask $4.50

Chart of CZR:

Originally listed on the Watch List: 12/01/13


Home Depot, Inc. - HD - close: 80.67

Company Info

HD is also in the services sector. The company is a major player in the do-it-yourself home improvement stores. The company currently has over 2,250 locations inside the U.S. HD last reported earnings on November 19th. The results were better than expected on both the top and bottom line. Management also raised their 2014 guidance. The initial reaction in the stock produced the intraday spike above $82.00. Traders have since bought the dip in HD at its rising 10-dma. The $81 area has been resistance for months and HD is on the verge of breaking out.

I am suggesting we wait for HD to close above $81.50 and buy calls the next morning with an initial stop loss at $76.75. Our long-term target is $99.00. FYI: The point & figure chart is bullish with a $97 target.

Breakout trigger: Wait for HD to close above $81.50
then buy calls the next morning.

BUY the 2015 Jan $90 call (HD1517a90) current ask $3.40

- or -

BUY the 2016 Jan $90 call (HD1615a90) current ask $6.30

Chart of HD:

Originally listed on the Watch List: 12/01/13


Yum! Brands - YUM - close: 77.68

Company Info

YUM is another service-sector candidate. The company operates about 39,000 fast-food restaurants in 125 countries (KFC, Pizza Hut, Taco Bell). There has been some concern over a slow down in YUM's sales in China but many analysts believe the worries are baked in and YUM is poised to recover in China. Technically the stock has broken out past major resistance near $75.00. The recent rally has helped produce a buy signal on its point & figure chart that is currently forecasting a long-term $105 target.

I would be tempted to buy calls on YUM now. However, this coming Thursday, December 5th, there is supposed to be a fast-food worker strike in 100 cities. The workers are striking for higher pay claiming they can't live on the fast-food chains low wages. There was a similar strike back in August. This time the workers are demanding $15 an hour, which is almost double what many make now (closer to $8). News of this protest could pressure the fast-food stocks lower. We want to take advantage of any short-term weakness.

I am suggesting we wait and buy calls on a dip at $75.25. If triggered we'll start with a stop loss at $71.90. Our long-term target is $95.00.

Buy-the-Dip trigger: $75.25

BUY the 2015 Jan $85 call (YUM1517a85) current ask $4.55

- or -

BUY the 2016 Jan $85 call (YUM1615a85) current ask $7.50

Chart of YUM:

Originally listed on the Watch List: 12/01/13


Active Watch List Candidates:



Allegheny Technologies - ATI - close: 33.22

Comments:
12/01/13: Resource-related names seemed to struggle this past week. ATI is flirting with a breakdown below its simple 30-dma. We're still waiting for a bullish breakout higher. I don't see any changes from my earlier comments.

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)

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


Citigroup Inc. - C - close: 52.92

Comments:
12/01/13: Citigroup has been trying to breakout past resistance near $53.50 all week long. The intraday high on Friday was $53.59. I am adjusting our entry trigger from waiting for a close above $53.50 to waiting for a close above $53.60 and then buying calls the next morning. Our suggested stop is unchanged at $47.25. Our long-term target is the $70.00 area.

NOTE: I have added the 2016 call option as a possible trade.

Breakout trigger: Wait for C to close above $53.60
buy calls the next morning with a stop loss at $47.25

BUY the 2015 Jan $60 call (C1517a60) current ask $3.20

- or -

BUY the 2016 Jan $60 call (C1615a60) current ask $5.60

12/01/13 adjust the entry trigger: wait for a close above $53.60 instead of a close above $53.50

Originally listed on the Watch List: 11/24/13


ConocoPhillips - COP - close: 72.80

Comments:
12/01/13: News that the U.S. and EU would lift some sanctions against Iran sparked a drop in oil prices. This pressured oil stocks but the weakness in COP wasn't that bad. Shares are still consolidating sideways in the $72-74 area. I don't see any changes from my prior comments.

I am suggesting we wait for COP to close above $75.00 and then buy calls the next morning with a stop loss at $69.75. More conservative investors might want to use a stop closer to $72 instead. If triggered our long-term target is $95.00.

Breakout trigger: Wait for COP to close above $75.00
then buy calls the next day with a stop at $69.75

BUY the 2015 Jan $80 call (COP1517a80)

Originally listed on the Watch List: 11/24/13


Helmerich & Payne, Inc. - HP - close: 77.00

Comments:
12/01/13: HP displayed some relative weakness last week. The stock has broken down below its rising 30-dma for the first time in months. If shares don't recover soon we'll either drop it as a bullish candidate or re-evaluate a potential buy-the-dip scenario. Currently we are waiting for a breakout past $80.00.

Earlier Comments:
Wait for HP to close above $80.25 and then buy calls the next day with a stop loss at $74.75. If triggered our long-term target is $95.00.

Wait for a close above $80.25, stop loss @ 74.75

BUY the 2015 Jan $90 call (HP1517a90)

11/17/13 strategy change: Wait for HP to close above $80.25 and then buy calls the next day with a stop loss at $74.75. Our new long-term target is $95.00. New option strike at 2015 $90 call

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


Starbucks - SBUX - close: 81.46

Comments:
12/01/13: SBUX has been slowly drifting higher. Readers might want to consider buying calls on a breakout above the November 6th high of $82.50. Tonight we are adjusting our buy-the-dip trigger to buy calls at $80.00 instead of $79.25. Our long-term target is $98.00.

Buy-the-Dip trigger: $80.00, stop loss @ 74.75

BUY the 2015 Jan $90 call (SBUX1517a90)

12/01/13 adjust the trigger to $80.00
11/24/13 adjust the trigger to $79.25
adjust the option strike to the 2015 January $90 call
11/17/13 adjust the trigger to $78.25
11/10/13 adjust the buy-the-dip entry to $78.00 and stop to $74.75
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: 59.20

Comments:
12/01/13: WAG hit some profit taking last week. Monday's move looks like a short-term bearish reversal and failed rally move. Three more days of declines only confirmed it. Yet WAG remains inside its recent $58-61 trading range. On the weekly chart last week's move has produced a bearish engulfing candlestick reversal pattern as well. At the moment our plan is unchanged. Wait for WAG to close above $61.00 and then buy calls the next day. If triggered we'll start with a stop loss at $56.75. Our long-term target is the $75 area.

FYI: WAG is scheduled to report earnings on December 20th. More conservative investors may want to wait until after we see how the market reacts to WAG's earnings on the 20th before initiating new positions.

Wait for WAG to close above $61.00,
then buy calls the next day with a stop at $56.75

BUY the 2015 Jan $65 call (WAG1517a65)

11/24/13 Strategy Update: new entry point to buy calls when WAG closes above $61.00. New stop loss @ 56.75.
11/17/13 new trigger at $56.00, up from $55.00
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


Western Digital Corp. - WDC - close: 75.04

Comments:
12/01/13: WAG tagged a new all-time high on Friday morning but the stock reversed and gave back all of its gains. Technically Friday's move has created a bearish engulfing candlestick reversal pattern. We'll have to see if there is any follow through lower. Tonight I am adjusting our entry strategy. Wait for WDC to close above $76.50 and then buy calls the next morning. We'll start with a stop loss at $69.75.

If triggered our long-term target is $94.00. FYI: The Point & Figure chart is bullish with a $91 target.

NOTE: I am putting a condition on this entry point. We want to wait for a close above $76.50 but we do not want to launch positions if WDC closes above $77.50.

Breakout trigger: Wait for a close above $76.50
buy calls the next morning with a stop loss at $69.75

BUY the 2015 Jan $90 call (WDC1517a90)

12/01/13 adjust entry point to a close above $76.50 instead of 76.25
adjust the stop loss to $69.75

Originally listed on the Watch List: 11/17/13