New Watch List Entries

A - Agilent Tech

ALK - Alaska Air Group

HSP - Hospira Inc


Active Watch List Candidates

CBI - Chicago Bridge & Iron

GILD - Gilead Sciences

MU - Micron Technology

SBUX - Starbucks


Dropped Watch List Entries

DLPH and ITW graduated to the play list.
JBHT has been removed.



New Watch List Candidates:


Agilent Technologies - A - close: 57.87

Company Info

Agilent is in the healthcare sector. The company is "the world's premier measurement company and a technology leader in chemical analysis, life sciences, diagnostics, electronics and communications" (company press release). The stock delivered a strong 2013 with a rally to new multi-year (ten-year) highs. That rally has continued into 2014 with A displaying relative strength. The two-day market sell-off has pushed A toward support near $57.50. If this market weakness continues then A might dip to the next support level near $55.00.

I am suggesting a buy-the-dip trigger at $55.50 with a stop loss at $52.40. If triggered our long-term target is $74.00.

Investors will want to note that A is scheduled to report earnings on Feb. 13th.

FYI: A does plan on spinning off its electronic measurement company, Keysight Technologies, toward the end of 2014.

Buy-the-Dip trigger: $55.50

BUY the 2015 Jan $60 call (A1517a60) current ask $5.30

- or -

BUY the 2016 Jan $65 call (A1615a65) current ask $6.80

Chart of A:

Originally listed on the Watch List: 01/26/14


Alaska Air Group - ALK - close: 79.65

Company Info

ALK is in the services sector. The company is a regional airline headquartered in Seattle, Washington. ALK reported earnings last week that beat estimates by five cents. Revenues were also ahead of estimates. ALK's earnings results were good enough to garner a couple of analyst upgrades in the last few days.

It looks like ALK's stock may have formed a short-term top. There should be some support near $75.00. I am suggesting a buy-the-dip trigger at $75.25. If triggered we'll start with a stop loss at $72.75. Our long-term target is $95.00. FYI: The point & figure chart is bullish with a $101 target.

Buy-the-Dip trigger: $75.25

BUY the 2015 Jan $80 call (ALK1517a80) current ask $10.10

Chart of ALK:

Originally listed on the Watch List: 01/26/14


Hospira Inc. - HSP - close: 44.57

Company Info

HSP is in the healthcare sector. The company manufactures injectable drugs and related products. HSP spent a good portion of last year consolidating sideways in the $38-42.50 trading range. Now after a five-month rest shares have recently broken out past resistance and rallied to new two-year highs. Profit taking on Friday, in spite of the market's sharp decline, was not that bad in shares of HSP.

More aggressive investors may want to buy calls now. I am hoping for a pullback. Broken resistance near $42.50 should be support. I'm suggesting a buy-the-dip trigger at $43.00. We'll use a stop loss at $39.90. Our long-term target is $49.75. You may want to aim higher since the point & figure chart is forecasting at $69 target but I do see potential resistance at $50.00.

FYI: Earnings are scheduled for February 12th.

Buy-the-Dip trigger: $43.00

BUY the 2015 Jan $45 call (HSP1517a45) current ask $5.20

Chart of HSP:

Originally listed on the Watch List: 01/26/14


Active Watch List Candidates:



Chicago Bridge & Iron - CBI - close: 75.78

Comments:
01/26/14: Wow! The sell-off in CBI looks extremely overdone. We suspect it's just pent up profit taking. We are adjusting our entry point strategy. CBI could see support at its simple 100-dma (near 74.40). I am suggesting a trigger to buy calls at $74.50. We'll move our stop loss stop loss to $72.25. We'll adjust the option strike down to the 2015 Jan $80 call. If triggered our long-term target is $98.00.

Buy calls on a dip at $74.50, new stop 72.25

BUY the 2015 Jan $80 call (CBI1517a80) current ask $7.10

01/26/14 adjust entry strategy to buy calls on a dip at $74.50, move the stop loss to $72.25. Adjust the option strike to 2015 Jan $80 call
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


Gilead Sciences - GILD - close: 80.62

Comments:
01/26/14: GILD spiked to new highs last week but shares have already corrected -$4.00 from its highs. I am adjusting our buy-the-dip trigger to $76.25.

Earlier Comments:
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. 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: $76.25 with a stop at $69.75

BUY the 2015 Jan $85 call (GILD1517a85)

01/26/14 move the buy-the-dip trigger from 75.25 to 76.25

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


JB Hunt Transport - JBHT - close: 76.30

Comments:
01/26/14: The transportation sector plunged -4% on Friday. JBHT followed it lower with a -2.79% drop. It seems unlikely that JBHT is going to breakout past $80 any time soon so we're removing JBHT as a watch list candidate tonight.

Trade did not open.

01/26/14 removed from the newsletter. trade did not open.

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


Micron Technology - MU - close: 22.92

Comments:
01/26/14: MU managed to weather the market's recent sell-off very well. Shares even managed to post a gain for the week. Odds are still good that MU will see a correction to what should be support near $22.00 or its simple 50-dma (currently near 21.70).

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)

- or -

BUY the 2016 Jan $30 call (MU1615a30)

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


Starbucks - SBUX - close: 74.98

Comments:
01/26/14: SBUX rallied on Friday thanks to its earnings report. The fact that it earnings is a bit surprising. Bottom line results were better than expected but SBUX missed the revenue estimate and guided lower. I remain longer-term bullish on SBUX in spite of the disappointing guidance. I suspect that this bounce will fail and we'll see SBUX dip toward $70.00.

Shares did bounce from support at its 200-dma near $72 so more aggressive investors might want to buy calls on a dip near $72 instead.

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