New Watch List Entries

BIG - Big Lots Inc.

KORS - Michael Kors


Active Watch List Candidates

HES - Hess Corp.


Dropped Watch List Entries

JOY graduated to our play list.

ASML, HFC, and UPS have been removed from the watch list.



New Watch List Candidates:


Big Lots Inc. - BIG - close: 38.39

Company Info

BIG is in the services sector. The company operates almost 1,500 closeout retailer stores in the U.S. Late last year most of the market was in rally mode. Yet BIG was crushed in early December when the company issued an earnings warning. After losing almost one third of its value BIG started to bounce. BIG most recent earnings report was March 7th and they lowered guidance again. Yet instead of falling the stock produced a huge spike. The company has decided to close its Canadian stores to focus on the U.S. and they have new management. Wall Street must have swallowed the BIG kool-aid because the stock has been pretty resilient over the last few weeks. Shares of BIG have also received multiple upgrades since its March earnings report.

BIG is now poised to breakout to new multi-year highs. There is resistance at $39.00. I am suggesting we wait for BIG to close above $39.25 and then buy calls the next morning with a stop loss at $35.85. If triggered our $47.00.

Breakout trigger: Wait for BIG to close above $39.25
then buy calls the next day with a stop loss at $35.75

BUY the 2015 Jan $40 call (BIG1517a40) current ask $3.80

Chart of BIG:

Originally listed on the Watch List: 04/13/14


Michael Kors - KORS - close: 86.87

Company Info

KORS is in the services sector. They are considered a specialty retailer. The sell high end apparel and accessories. Shares of KORS soared in early February following its earnings report. Wall Street was expecting $0.86 in earnings on revenues of $0.86 billion. KORS delivered $1.11 on revenues of $1 billion. Not only that but KORS raised their guidance. By the end of February KORS has surged from $77 to $100. A lot of analyst firms raised their price target on KORS into the $110-120 zone. Unfortunately the broader market's trouble seems to be weighing on KORS stock. Shares now look poised to fill the gap and likely test support near $80.00 and its simple 200-dma.

I do want to caution you on this trade. We are attempting to "catch the falling knife". That can be hazardous. Tonight we're suggesting a buy-the-dip trigger to buy calls at $81.00. We'll try and limit our risk with a stop loss at $77.75. You, the individual trader, may want to sit back and watch for a bounce from the $80 region before considering new positions.

If we are triggered at $81.00 our target is $99.00.

Buy-the-Dip trigger: $81.00, stop loss at $77.75

BUY the 2015 Jan $90 call (KORS1517a90) current ask $9.60

Chart of KORS:

Originally listed on the Watch List: 04/13/14


Active Watch List Candidates:



ASML Holdings - ASML - close: 87.33

Comments:
04/13/14: Shares of ASML have suffered along with the rest of the market. Unfortunately Friday's drop broke through several layers of support all at once.

We are removing ASML as a watch list candidate.

Trade did not open.

04/13/14 removed from the watch list. Trigger was a close above $95.25

Originally listed on the Watch List: 03/23/14


Hess Corp. - HES - close: 83.58

Comments:
04/13/14: HES was not immune to the market's weakness but shares only lost a couple of points. I do not see any changes from last week's new watch list candidate comments.

Earlier Comments:
The stock does have significant resistance in the $87.00 area. I am suggesting we wait for HES to close above $87.50 and then buy calls the next morning with a stop loss at $81.75. I suspect the $100 level could prove to be round-number resistance but our long-term target will be $109.00.

FYI: HES is scheduled to report earnings on April 30th.

Breakout trigger: Wait for HES to close above $87.50
then buy calls the next day with a stop loss at $81.75.

BUY the 2015 Jan $95 call (HES1517a95)

- or -

BUY the 2016 Jan $100 call (HES1615a100)

Originally listed on the Watch List: 04/06/14


HollyFrontier Corp. - HFC - close: 46.18

Comments:
04/13/14: Shares of HFC are down three out of the last four weeks. It seems unlikely that shares will meet our entry requirement, a close above $50.50, any time soon. The stock has not presented any desirable alternative entry points. We are removing HFC as a watch list candidate.

Trade did not open.

04/13/14 removed from the watch list. trigger was a close over $50.50

Originally listed on the Watch List: 03/23/14


United Parcel Service - UPS - close: 96.27

Comments:
04/13/14: The transportation index is not that far from its all-time high. Unfortunately, UPS is still underperforming. Shares of UPS appear to have formed a bearish double top under its 100-dma. The next move seems like it will be lower. Tonight we're removing UPS as a watch list candidate.

Trade did not open.

04/13/14 removed from the watch list. trigger was a close over $100.25

Originally listed on the Watch List: 03/09/14