New Watch List Entries

DLPH - Delphi Automotive

GILD - Gilead Sciences


Active Watch List Candidates

CBI - Chicago Bridge & Iron

ITW - Illinois Tool Works

JBHT - JB Hunt Transport

MU - Micron Technology

SBUX - Starbucks


Dropped Watch List Entries

FL has graduated to our active play list
STX and ZNGA have been removed from the watch list.



New Watch List Candidates:


Delphi Automotive - DLPH - close: 62.70

Company Info

DLPH is in the consumer goods sector. This British company makes automobile parts and components. When DLPH last reported earnings back in November their management guided lower for revenues but this bad news has not stopped the stock's climb to new highs. This past week the company announced an increase to its dividend (25 cents/quarter) and a $1 billion stock buyback program. This news may have helped propel DLPH to a new all-time high this past week.

We don't want to chase it here. Broken resistance near $60.00 should be new support. I am suggesting a buy-the-dip trigger to buy calls at $60.25. If triggered we'll start with a stop loss at $57.25. Our long-term is probably the $75-80 zone.

FYI: DLPH is scheduled to report earnings on February 4th. Investors may also want to note that DLPH will begin trading ex-dividend on February 13, 2014. The quarterly cash dividend should be 25 cents.

Buy-the-Dip trigger: $60.25
start with a stop at $57.25

BUY the 2015 Jan $65 call (DLPH1517a65) current ask $5.80

Chart of DLPH:

Originally listed on the Watch List: 01/19/14


Gilead Sciences - GILD - close: 78.40

Company Info

Biotech stocks were some of the market's best performers last week. GILD helped lead the charge higher with a breakout to new all-time highs. This stock seems to be a darling of Wall Street. The fact that shares almost doubled last year GILD has garnered a number of bullish analyst calls in the last several weeks. All of this bullish sentiment is built on positive expectations for GILD's pipeline of drugs currently in development and a few of them could turn out to be blockbuster drugs. Of course all of this positive spin is a two-edged sword. If GILD announces any sort of negative news about delays or setbacks it could spark significant selling since so many investors are betting on GILD.

I am labeling this a more aggressive, higher risk trade. There is always the risk that the wrong headline sends any biotech stock gapping lower (or higher as the case may be). I'm suggesting small positions to start. Broken resistance near $75.00 should be new support. Therefore we are listing a buy-the-dip trigger at $75.25. If triggered we'll use a stop loss at $69.75. Our long-term target is $95.00. Currently the point & figure chart is bullish and forecasting at $98 target.

FYI: GILD is expected to report earnings in early February but no date has been set.

Buy-the-Dip trigger: $75.25 with a stop at $69.75

BUY the 2015 Jan $85 call (GILD1517a85) current ask $8.80

Chart of GILD:

Originally listed on the Watch List: 01/19/14


Active Watch List Candidates:



Chicago Bridge & Iron - CBI - close: 82.86

Comments:
01/19/14: As promised we're evaluating our entry-point strategy on CBI. Big picture I'd prefer to take a buy-the-dip approach on new plays given the market's recent action. However, CBI could be the exception. Shares continue to hold up well and ended the week poised to breakout to new all-time highs.

I am suggesting we wait for CBI to close above $84.00 a share and then buy calls the next morning with a stop loss at $79.40. If triggered our long-term target is $98.00.

Wait for a close above $84.00,
then buy calls the next morning with a stop at $79.40.

BUY the 2015 Jan $90 call (CBI1517a90) current ask $6.20

01/19/14 adjust entry strategy. Wait for a close above $84.00, move the stop loss to $79.40
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


Illinois Tool Works Inc. - ITW - close: 82.66

Comments:
01/19/14: ITW produced a bounce off the $81.00 level last week. I could see using the bounce as a bullish entry point. However, we are sticking to our plan and keeping the suggested entry point at $80.75. More conservative investors may want to wait until after we see how the market reacts to ITW's earnings results on January 28th before initiating new positions.

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

Buy-the-Dip trigger: $80.75

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


JB Hunt Transport - JBHT - close: 77.59

Comments:
01/19/14: JBHT displayed some relative weakness on Friday with a -1.1% decline but we're not giving up yet. I don't see any changes from my prior comments.

Earlier Comments:
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)

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


Micron Technology - MU - close: 22.38

Comments:
01/19/14: MU is starting to correct lower as expected. I don't see any changes from my prior comments.

Earlier Comments:
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 $2.84

- or -

BUY the 2016 Jan $30 call (MU1615a30) current ask $3.00

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


Starbucks - SBUX - close: 74.90

Comments:
01/19/14: I am not surprised to see SBUX still retreating lower. We've been looking for a drop toward the $70 area. That could happen soon if SBUX disappoints with earnings. The company is scheduled to report earnings this week on January 23rd. More aggressive investors might want to consider buying calls on a dip at the simple 200-dma, currently near $71.65.

Earlier Comments:
I am suggesting a buy-the-dip trigger to buy calls at $70.50 with a stop loss at $67.00.

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: 61.20

Comments:
01/19/14: STX has continued to rally. The relative strength in this stock is encouraging but I do not want to chase it. We will remove STX as a watch list candidate tonight. Wait to see how STX reacts following its earnings report on January 27th. Then we'll look at the stock again.

Trade did not open.

01/19/14 removed from the watch list
STX too strong. We do not want to chase it.
01/05/14 adjust the buy-the-dip trigger from $51.00 to $52.00

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


Zynga, Inc. - ZNGA - close: 3.55

Comments:
01/19/14: ZNGA is not cooperating. The stock collapsed on Thursday thanks to negative analyst comments. The stock plunged more than -10% as a reaction. It seems unlikely that ZNGA will hit our suggested entry point (a close over $4.25) any time soon. We are removing this stock as a watch list candidate.

Trade did not open.

01/19/14 removed from the watch list

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