New Watch List Entries

KBH - KB Home


Active Watch List Candidates

A - Agilent Tech

GILD - Gilead Sciences

MU - Micron Technology


Dropped Watch List Entries

ALK, CBI, HSP and SBUX all graduated to our play list.



New Watch List Candidates:


KB Home - KBH - close: 18.81 change: -0.52

Company Info

KBH is in the industrial goods sector. The company is a residential home builder. Homebuilders as a group appeared to peak in early 2013. Shares of KBH corrected lower and spent much of 2013 building a base in the $16-18 zone. The company's latest earnings report in December was a miss. Yet in spite of the disappointing results there was no big reaction in the stock price. Shares actually reversed higher a couple of days later. If investors are buying KBH in spite of bearish results then maybe all the bad news has been priced in. There has been a worry that rising interest rates could crush the rebound in home sales but KBH's stock appears to be building on a trend of higher lows.

This past week we've seen KBH breakout past major technical resistance at its 200-dma. Today (Feb. 3rd) traders are buying the dip near short-term support around the $18.50 level. More aggressive investors may want to buy calls right now and use a tight stop loss. I am suggesting we wait for KBH to close above $20.00 since the $20.00 level could be round-number resistance. If triggered our long-term target is $25.00.

Breakout trigger: Wait for a close above $20.00,
then buy calls the next day with a stop at $18.45.

BUY the 2015 Jan $20 call (KBH1517a20) current ask $2.48

Chart of KBH:

Originally listed on the Watch List: 02/03/14


Active Watch List Candidates:



Agilent Technologies - A - close: 58.15 (as of Friday, Jan. 31st)

Comments:
02/03/14: We are expecting A to correct lower toward what should be support near $55.00. The stock is underperforming the market on Monday, Feb. 3rd with a -3.1% decline. Right now our plan is to buy calls on a dip at $55.50. Yet more conservative traders may want to wait and see if shares bounce from $55.00 as an alternative entry point strategy.

Earlier Comments:
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 $4.50

- or -

BUY the 2016 Jan $65 call (A1615a65) current ask $6.05

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


Gilead Sciences - GILD - close: 80.65 (as of Friday, Jan. 31st)

Comments:
02/03/14: GILD spent last week churning sideways near the $80 level. Today (Monday. Feb. 3rd) the stock is down about -1.85% and producing what appears to be a bearish engulfing candlestick reversal pattern. I do not see any changes from my prior comments.

We want to buy calls on a dip at $76.25.

CAUTION: GILD is scheduled to report earnings on Feb. 4th after the closing bell. That means Wednesday morning, Feb. 5th, GILD could be volatile.

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.

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


Micron Technology - MU - close: 22.84

Comments:
02/03/14: I am adjusting our entry point strategy on MU. The stock continues to consolidate sideways. It is holding up reasonably well during the Monday, Feb. 3rd, market sell-off.

Instead of buying a dip at $22.00 I'd rather wait for MU to breakout to new relative highs. The 2014 intraday high is $24.50. Wait for MU to close above $24.50 and then buy calls the next day. We'll move the stop loss to $21.75.

Earlier Comments:
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.

trigger: Wait for a close above $24.50, use a stop at $21.75

BUY the 2015 Jan $25 call (MU1517a25)

- or -

BUY the 2016 Jan $30 call (MU1615a30)

02/03/14 adjust entry strategy. Instead of a buy-the-dip trigger at $22.00, wait for MU to close above $24.50 and then buy calls the next day.

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