New Watch List Entries

CLX - Clorox Co.

ZNGA - Zynga Inc.


Active Watch List Candidates

BIG - Big Lots Inc.

HES - Hess Corp.

KORS - Michael Kors


Dropped Watch List Entries



New Watch List Candidates:


The Clorox Co. - CLX - close: 90.84

Company Info

CLX is in the consumer goods sector. The company makes consumer and professional products across multiple brands. They have a cleaning division, household division, and a lifestyle division.

CLX is what many consider a "safe haven" investment or a "recession-proof" stock. That's because in an economic slowdown consumer still buy the household goods and cleaning supplies they need. For a mature company like CLX, over 100 years old, growth has slowed down but the stock also offers a 3% dividend yield.

Shares have been consolidating sideways for weeks (about mid February). CLX last earnings report on February 4th was a disappointment thanks to management lowering their guidance. Investors seem to have backed that into their picture for CLX or they have forgotten since CLX shares have rallied to new two-month highs and broken through resistance near $90.00.

The most past $90.00 looks like a new bullish entry point. However, I would like to see more confirmation. That's why tonight I'm suggesting we wait for CLX to close above $91.50 and buy calls the next morning with a stop loss at $86.90. Please note that CLX is scheduled to report earnings on May 1st and investors may want to wait until after CLX reports earnings before they initiate new positions.

If we are triggered (a close above $91.50) then our long-term target is the $100-110 zone. The point & figure chart is bullish with a $128 target.

NOTE: I would hesitate to buy the 2016 calls because the spreads are so wide but over time they should narrow.

Breakout trigger: Wait for a close above $91.50
then buy calls the next day, stop @ 86.90

BUY the 2015 Jan $95 call (CLX1517a95) current ask $2.25

- or -

BUY the 2016 Jan $100 call (CLX1615a100) current ask $2.90

Chart of CLX:

Originally listed on the Watch List: 04/20/14


Zynga, Inc. - ZNGA - close: 4.29

Company Info

This is a more aggressive, higher-risk trade. ZNGA is in the technology sector. The company makes online social games on the internet, social networks and mobile platforms (smarthphones and tablets). They are probably best known for their Farmville and Words with Friends games.

The stock has fallen a long way from its 2012 highs near $15 a share but they are up significantly from the 2012 lows near $2.00. Their most recent earnings report launched shares higher when management said they expect to be profitable again in 2014. Unfortunately, ZNGA has given back nearly all of those gains with a drop from $5.50 to $4.00.

It looks like investors have finally started buying ZNGA again as it bounces from technical support at its rising 200-dma and new longer-term trend of higher lows. I suspect we could see an entry point soon.

Here's the plan. ZNGA reports earnings on April 23rd (this Wednesday), after the closing bell. Wall Street expects a loss of 1 cent per share for the quarter. We do not want to open positions until after April 23rd. Thursday morning could be very volatile for shares of ZNGA.

Wait for ZNGA to close above $4.50 but not above $4.75. I'm giving it a 25-cent range. If ZNGA closes in the $4.50-4.75 zone then we want to open bullish positions the next morning. Our first available entry point is potentially Friday morning (April 25th). If triggered our long-term target will be the $6-to-$8 zone. We'll start with a stop at $3.90.

*See entry details above*

BUY the ZNGA stock @ (trigger)

- or -

Buy the 2015 Jan $5 call (ZNGA1517a5) current ask $0.64

Chart of ZNGA:

Weekly Chart of ZNGA:

Originally listed on the Watch List: 04/20/14


Active Watch List Candidates:



Big Lots Inc. - BIG - close: 38.72

Comments:
04/20/14: BIG is still slowly drifting higher. I don't see any changes from last week's watch list comments.

Earlier Comments:
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 $4.20

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


Hess Corp. - HES - close: 87.27

Comments:
04/20/14: Energy stocks helped lead the market rebound last week. Shares of HES delivered gains every day last week and closed at new multi-year highs. More aggressive investors may want to buy calls now. Our suggested entry point is a close above $87.50 and then buy calls the next day, which could happen this week.

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) current ask $3.10

- or -

BUY the 2016 Jan $100 call (HES1615a100) current ask $5.55

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


Michael Kors - KORS - close: 89.93

Comments:
04/20/14: After a four-week decline shares of KORS managed a bounce thanks to a rebound in the broader market. I am not convinced the correction is over and KORS stalled near resistance at $90.00. The plan is unchanged. We're waiting for a dip near $80.00, which should be support bolstered by its 200-dma.

Earlier Comments:
I do want to caution you on this trade. We are attempting to "catch the falling knife". That can be hazardous. We are 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)

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