Editor's Note:

It was another successful week for our watch list. All three of last week's new candidates have graduated to our active play list (BBT, MGM, and MTW).

Tonight we're adding three more.



New Watch List Entries

CBI - Chicago Bridge & Iron

GE - General Electric

SWN - Southwestern Energy


Active Watch List Candidates

C - Citigroup, Inc.

HD - Home Depot, Inc.

MSI - Motorola Solutions

WFC - Wells Fargo & Co


Dropped Watch List Entries

BBT, MGM, and MTW have graduated to our active play list.

Tonight we're removing ATI as a watch list candidate.



New Watch List Candidates:


Chicago Bridge & Iron - CBI - close: 81.69

Company Info

CBI is in the industrial goods sector. The company is a major player in large energy infrastructure construction. 2013 has been a great year for the stock and momentum has pushed it to a new high. As the global economy slowly improves it should mean more business for CBI.

This past week saw CBI breakout past resistance near $80.00. The move has created a new triple-top breakout buy signal on its point & figure chart. Investors may want to just jump in now and buy calls at the open on Monday. Tonight we're suggesting a buy-the-dip trigger to buy calls at $80.25 since broken resistance at $80.00 should be support.

If triggered we'll use a stop loss at $74.75. Our long-term target is $98.50.

Buy-the-Dip trigger: $80.25

BUY the 2015 Jan $90 call (CBI1517a90) current ask $6.50

Chart of CBI:

Originally listed on the Watch List: 12/22/13


General Electric - GE - close: 27.36

Company Info

It has been a very long time since we have played GE on the LEAPStrader newsletter. The stock suffered terribly during the 2007-2008 bear market. Shares found a bottom in late 2011 but the move up has been very slow. This most recent quarter the rally in GE accelerated following its earnings report in October. The last few weeks have seen shares consolidate below resistance near $27.50. A breakout here could signal the next leg higher.

I am suggesting we wait for GE to close above $27.65 and then buy calls the next day. If triggered our long-term target is the $32.50-35.00 zone. I do expect to see some resistance near the $30.00 level. Keep in mind that GE doesn't move very fast so we'll need to be patient.

FYI: GE is scheduled to report earnings on January 17th. We can expect to see an increase in volatility following the announcement.

Breakout trigger: Wait for a close above $27.65,
buy calls the next morning with a stop loss at $25.95.

BUY the 2015 Jan $30 call (GE1517a30) current ask $1.03

- or -

BUY the 2016 Jan $30 call (GE1615a30) current ask $1.86

Chart of GE:

Originally listed on the Watch List: 12/22/13


Southwestern Energy Co. - SWN - close: 39.32

Company Info

SWN is in the basic materials sector. The company is an independent energy company developing oil and natural gas resources in the U.S. The stock has underperformed its peers this year. It looks like that could change soon. SWN has been stuck in the $35-40 trading range for several months. A breakout here near $40.00 would be big news.

The intraday high for 2013 was $40.34. I am suggesting we wait for SWN to close above $40.50 and then buy calls the next morning with a stop loss at $37.45. If triggered our long-term target is $49.50.

Breakout trigger: Wait for SWN to close over $40.50
then buy calls the next morning with a stop at $37.45

BUY the 2015 Jan $45 call (SWN1517a45) current ask $2.40

- or -

BUY the 2016 Jan $45 call (SWN1615a45) current ask $4.55

Chart of SWN:

Originally listed on the Watch List: 12/22/13


Active Watch List Candidates:



Allegheny Technologies - ATI - close: 33.10

Comments:
12/22/13: ATI managed a small gain for the week but shares are not working for us. I am removing ATI as a watch list candidate. The stock never met our entry point requirement with a close above $34.50.

Trade did not open.

12/22/13 removed from the watch list.

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


Citigroup Inc. - C - close: 52.21

Comments:
12/22/13: The financial sector delivered a decent bounce last week. C rebounded from the prior week's lows near its 100-dma (jus below $50.50). I am still suggesting we wait for a new relative high.

Earlier Comments:
We want to wait for C to close above $53.60 and then buy calls the next morning. Our long-term target is the $70.00 area.

FYI: C is scheduled to report earnings on January 16th.

Breakout trigger: Wait for C to close above $53.60
buy calls the next morning with a stop loss at $47.90

BUY the 2015 Jan $60 call (C1517a60)

- or -

BUY the 2016 Jan $60 call (C1615a60)

12/08/13 if triggered start with a stop loss at $47.90
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


Home Depot, Inc. - HD - close: 80.04

Comments:
12/22/13: HD seems to be slowly improving. Shares are inching higher and getting closer to a bullish breakout.

Earlier Comments:
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)

- or -

BUY the 2016 Jan $90 call (HD1615a90)

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


Motorola Solutions - MSI - close: 65.61

Comments:
12/22/13: MSI bounced back to test resistance near its recent highs in the $66.25 area. If this market rally continues we could see MSI breakout soon.

Earlier Comments:
I am suggesting a trigger to buy calls at $66.75. If triggered our long-term target is the $80-90 zone but we will adjust this as needed. The point & figure chart is bullish with a long-term target at $91.00.

Breakout trigger: $66.75, start with a stop loss at $61.90.

BUY the 2015 Jan $70 call (MSI1517a70)

- or -

BUY the 2016 Jan $75 call (MSI1615a75)

Originally listed on the Watch List: 12/08/13


Wells Fargo & Co. - WFC - close: 44.96

Comments:
12/22/13: Strength in the financial sector lifted WFC to a new all-time high. Yet shares stalled near round-number resistance at the $45.00 level. There is no change from my earlier comments.

Earlier Comments:
The $44.50-45.00 zone appears to be major resistance. A reversal here would look like a potential bearish double top pattern. Yet a breakout could signal the next major leg higher.

I am suggesting we wait for WFC to close above $45.25 and then buy calls the next day with a stop loss at $41.90. Our long-term target is $54.50.

Breakout trigger: Wait for WFC to close above $45.25
then buy calls the next day with a stop at $41.90

BUY the 2015 Jan $50 call (WFC1517a50) current ask $1.46

- or -

BUY the 2016 Jan $50 call (WFC1615a50) current ask $2.89

Originally listed on the Watch List: 12/08/13