New Watch List Entries

JBHT - JB Hunt Transport

MU - Micron Technology

ZNGA - Zynga Inc


Active Watch List Candidates

CBI - Chicago Bridge & Iron

FL - Foot Locker, Inc.

ITW - Illinois Tool Works

SBUX - Starbucks

STX - Seagate Tech.


Dropped Watch List Entries

C has graduated to our active play list.
JNPR hit our entry trigger on Friday so it has moved to our new plays.



New Watch List Candidates:


JB Hunt Transport - JBHT - close: 79.23

Company Info

As the name might imply JBHT is in the transportation industry, more specifically the trucking industry. Back in December the company lowered their earnings guidance but the news had little impact on the stock price. Normally and earnings warning would send a stock sharply lower. Investors could be betting that an improving economy will spell stronger business for the truckers.

JBHT has slowly clawed its way to the top of a major consolidation zone and now it looks poised to breakout. I am suggesting we wait for JBHT to close above $80.50 and then buy calls the next morning with a stop loss at $74.75. If triggered our long-term target is $98.00. Currently the point & figure chart is forecasting at $93 target.

FYI: JBHT is scheduled to report earnings on January 23rd. More conservative investors may want to wait until after we see how the market reacts to JBHT's results before initiating any positions.

Breakout trigger: Wait for a close above $80.50
then buy calls the next day with a stop at $74.75.

BUY the 2015 Jan $85 call (JBHT1517a85) current ask $4.60

Chart of JBHT:

Originally listed on the Watch List: 01/12/14


Micron Technology - MU - close: 23.71

Company Info

MU is in the technology sector. The company makes DRAM memory chips (part of the semiconductor industry). This stock was a huge performer in 2013. Many investors were shooting against it, thinking the stock was overpriced. Then earnings came out. MU just reported earnings this past week and crushed Wall Street's estimates. Analysts were expecting $3.71 in revenues and a profit of 51 cents a share. MU delivered $4.0 billion in revenues and 77 cents in profits. Shares tagged multi-year highs. I suspect we will see MU fill the gap from Wednesday morning.

Use a buy-the-dip entry point at $22.00. If triggered we'll start with a stop loss at $19.75. Our long-term target is the $28-30 area.

Keep in mind that late last year MU saw some volatility around news that a rival chip maker, Hynix, was building a new factory in 2014 and investors worried that might (naturally) impact supply and thus memory pricing. This could be a story that shows up again in 2014 even though the new factory probably won't start producing until 2015.

Buy-the-Dip trigger: $22.00, stop @ 19.75

BUY the 2015 Jan $25 call (MU1517a25) current ask $3.60

- or -

BUY the 2016 Jan $30 call (MU1615a30) current ask $3.50

Chart of MU:

Originally listed on the Watch List: 01/12/14


Zynga, Inc. - ZNGA - close: 4.11

Company Info

ZNGA is part of the technology sector. The company develops online "social" games. They're the geniuses behind games like Farmville, Words with Friends, Mafia Wars, and more. The stock has plunged from its 2012 highs near $15. Shares have been languishing under the $4.00 level for over a year. Yet it looks like ZNGA has finally found a bottom.

It is worth noting that the company is losing money. Investors are betting on a turnaround plan. ZNGA just replaced their CEO about six months ago. Fortunately the latest earnings report, back in October, showed losses less than analysts expected. This was in spite of a massive loss in the number of daily active users. The next earnings report could be key for ZNGA. They should report sometime in early February.

More conservative investors may want to wait until after we see ZNGA's earnings report and after we see how the market reacts to the news. I am suggesting we jump ahead of the numbers. The high this past week was $4.25. Wait for ZNGA to close above $4.25 and then open positions the next morning. We'll use a stop loss at $3.75. I am not setting a hard target yet but it will probably be in the $6.00-8.00 zone.

You'll notice that I am listing both ZNGA's stock and a long-term option. I would choose one or the other.

Breakout trigger: Wait for ZNGA to close over $4.25
then open bullish positions the next morning.

buy ZNGA stock @ (trigger)

- or -

BUY the 2015 Jan $5 call (ZNGA1517a5) current ask $0.70

Chart of ZNGA:

Originally listed on the Watch List: 01/12/14


Active Watch List Candidates:



Chicago Bridge & Iron - CBI - close: 82.22

Comments:
01/12/14: Hmm... the bounce in the market and CBI's bounce from round-number support at $80.00 is creating temptation. Do we buy this rebound from short-term support? Or do we stick to the plan and wait for a deeper pullback closer to its 50-dma? Or do we buy a breakout to new highs? Any of these are potential strategies but my bias right now is to buy on a dip. I am adjusting our suggested entry point to $78.50. If CBI doesn't cooperate this week we'll re-evaluate our entry strategy.

Earlier Comments:
Our long-term target is $98.50.

Buy-the-Dip trigger: $78.50

BUY the 2015 Jan $90 call (CBI1517a90)

01/12/14 move the trigger to $78.50 (from 78.25)
01/05/14 adjust the buy-the-dip trigger to $78.25, from $80.25
adjust the stop loss to $74.45 from $74.75.

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


Foot Locker, Inc. - FL - close: 41.26

Comments:
01/12/14: We were encouraged that FL did not participate in the market's 2014 decline. Yet it's not participating in the market's bounce either. Shares are just consolidating sideways in the $40.50-42.00 area. I don't see any changes from my prior comments. We are waiting for a correction.

I am suggesting a buy-the-dip entry point at $39.25. If triggered we'll use a stop loss at $36.75. Our target is $48.00. More aggressive traders could aim higher since the point & figure chart is forecasting a $60 target.

Buy-the-Dip trigger: $39.25

BUY the 2015 Jan $40 call (FL1517a40)

Originally listed on the Watch List: 12/29/13


Illinois Tool Works Inc. - ITW - close: 82.47

Comments:
01/12/14: ITW's pullback has stalled at short-term support near $82.00. I am almost tempted to buy calls here. However, odds are good that ITW will retest technical support near its 50-dma sooner or later. I am raising our buy-the-dip entry point $80.75.

If triggered we'll start with a stop loss at $76.85. Our long-term target is $95.00.

Buy-the-Dip trigger: $80.25

BUY the 2015 Jan $85 call (ITW1517a85)

01/12/14 adjust the buy-the-dip entry point to $80.75 (from 80.25)

Originally listed on the Watch List: 12/29/13


Starbucks - SBUX - close: 77.67

Comments:
01/12/14: SBUX is trying to bounce from support near its December lows and the $76.00 level. Thus far the rebound is running into trouble at its new trend of lower highs. There is no change from my prior comments.

Earlier Comments:
I am probably a bit early adding SBUX to the watch list but we're listing a buy-the-dip trigger to buy calls at $70.50 with a stop loss at $67.00.

Earnings are expected in late January but no date has been confirmed yet.

Buy-the-Dip trigger: $70.50

BUY the 2015 Jan $75 call (SBUX1517a75)

- or -

BUY the 2016 Jan $80 call (SBUX1615a80)

Originally listed on the Watch List: 01/05/14


Seagate Technology - STX - close: 58.39

Comments:
01/12/14: Memory chip stocks like STX, WDC, and SNDK continued to rally last week. The recent action in STX is starting to look a little bit like a short-term top with Wednesday's intraday pullback from its highs and Thursday's decline. I am leaving our buy-the-dip trigger at $52.00 for now. However, I am adding STX rival, SanDisk (SNDK), to the new plays section tonight.

If triggered we'll use a stop loss at $46.75. Our long-term target is $65. More aggressive investors could aim higher. The point & figure chart is predicting a $77 target.

Buy-the-Dip trigger: $52.00

BUY the 2015 Jan $55 call (STX1517a55)

01/05/14 adjust the buy-the-dip trigger from $51.00 to $52.00

Originally listed on the Watch List: 12/29/13