New Watch List Entries

EVEP - EV Energy Partners

MSFT - Microsoft Corp.

XOM - Exxon Mobil Corp.


Active Watch List Candidates

HIG - Hartford Financial Group

VFC - V.F. Corp.


Dropped Watch List Entries

FFIV graduated to our active play list.



New Watch List Candidates:


EV Energy Partners - EVEP - close: 38.45

Company Info

EVEP is in the energy industry. They are a master limited partnership and one of the largest operators of onshore oil and gas assets. They have properties in the Utica Shale, Barnett Shale, the Appalachian Basin, the Mid-Continent area, the San Juan Basin, the Monroe Field in Louisiana, the Permian Basin, Central and East Texas, and Michigan.

Shares of this company have spent the last several months building a bottom. If the market turns more volatile then investors could turn to EVEP to capture the stock's 8% dividend yield. If oil prices continue to climb it should also give EVEP a boost.

More aggressive investors may want to consider bullish positions now. I am suggesting we wait for EVEP to close above $40.25 and then buy calls the next morning with a stop loss at $35.75.

Breakout trigger: Wait for a close above $40.25
then buy calls the next day with a stop at $35.75.

BUY the 2015 Jan $40 call (EVEP150117C40) current ask $1.95

Option Format: symbol-year-month-day-call-strike

Chart of EVEP:

Originally listed on the Watch List: 06/15/14


Microsoft Corp. - MSFT - close: 41.23

Company Info

Shares of semiconductor giant Intel (INTC) soared on Friday when the company surprised investors by raising its revenue guidance the night before. INTC said they were seeing stronger sales of PCs. That's right. They said PCs. The sale of personal computers has been falling for several quarters as consumer spend the money on laptops, tablets, and smartphones. To be fair INTC did say they were seeing stronger sales of PCs to businesses but it's still good news for INTC but it could be great news for MSFT.

INTC hinted that when MSFT stopped supporting the Windows XP operating system in April this year it has sparked an upgrade cycle. XP has been around for years. One analyst estimated that 25% of the PCs currently connected to the Internet are running XP. That's a huge number of computers and now they're at risk for virus and hacking attempts that MSFT will no longer try to patch.

As businesses and consumers upgrade their PC it should mean strong sales for MSFT's Windows 8 operating software. This upgrade cycle could last a while.

Currently shares of MSFT are in a long-term up trend (see chart) and they closed near 14-year highs on Friday. There is short-term resistance at $41.65. I am suggesting we wait for MSFT to close above $42.00 and then buy calls the next day with a stop loss at $38.40.

I am listing the 2015 and 2016 calls but my preference is for the 2016s.

Breakout trigger: Wait for a close above $42.00
then buy calls the next morning with a stop loss at $38.40.

BUY the 2015 Jan $45 call (MSFT150117C45) current ask $1.03

- or -

BUY the 2016 Jan $45 call (MSFT160115C45) current ask $2.50

Option Format: symbol-year-month-day-call-strike

Chart of MSFT:

Originally listed on the Watch List: 06/15/14


Exxon Mobil Corp. - XOM - close: 102.65

Company Info

XOM is the largest publicly traded oil company on the planet. They're actually one of the largest companies on the planet with more than 75,000 employees and a market cap of more than $440 billion.

This company is so big they've got their hands in just about every region of the world, anywhere from U.S. shale region, Canadian oil sands, West Africa, Kazakstan, everywhere. Of course being every does pose a risk to geopolitical tensions. XOM has some significant deals with Russia. If the situation between Russia and the West were to worsen it could spell trouble for XOM's investments in Russia. The same holds true in Iraq. Right now violence in Iraq is driving oil prices higher but it poses a risk for XOM's investments in the country. Currently most of the fighting is in the northern half of Iraq and most of the oil fields and infrastructure is in the south. There is no guarantee the Iraq fighting couldn't move south.

Technically shares look great. The stock hit all-time highs in early May and spent the rest of the month consolidating gains. Now shares are bouncing from technical support at its rising 50-dma. XOM looks poised to breakout higher soon. Not only does XOM have a strong stock buyback program but they're currently yielding 2.7%. That's more than a U.S. ten-year bond's 2.6% yield.

Tonight I am suggesting we wait for XOM to close above $103.75 and then buy calls the next morning with a stop loss at $99.25. Our long-term target is the $125-130 zone. The point & figure chart is bullish and forecasting at $133 target.

Breakout trigger: Wait for a close above $103.75
then buy calls the next day with a stop at $99.25.

BUY the 2015 Jan $105 call (XOM150117C105) current ask $2.89

- or -

BUY the 2016 Jan $110 call (XOM160115c110) current ask $3.90

Option Format: symbol-year-month-day-call-strike

Chart of XOM:

Originally listed on the Watch List: 06/15/14


Active Watch List Candidates:



The Hartford Financial Services Group - HIG - close: 35.73

Comments:
06/15/14: Last week's pullback in shares of HIG was pretty mild. I do not see any changes from my earlier comments.

Earlier Comments: June 8, 2014:
Financial stocks helped lead the market higher last week. If this bull market continues then the financials should remain part of the leadership group. HIG has been making progress in its transformation. The company is focusing more on its property and casualty insurance business, its Group Benefits business, and its mutual fund business. They just recently sold their Japan annuity company, which has reduced the company's risk profile.

This turnaround has been productive. Their most recent earnings report came in 25 cents better than Wall Street estimates with a profit of $1.18 per share. This net income of $495 million compares to a $241 million loss in Q1 2013. HIG has also been making improvements in its insurance combined ratio, which is essentially their gross margin on their insurance business. They've also been buying back stock.

Technically the three-week bounce from HIG's rising 200-dma has pushed shares toward resistance near $36.50. This is also the top of a five-month consolidation range. A breakout here should signal the next leg higher.

Tonight I am suggesting we wait for HIG to close above $36.75 and then buy calls the next morning with a stop loss at $33.75. Our long-term target is the $45.00 region.

Breakout trigger: Wait for a close above $36.75
buy calls the next day with a stop loss at $33.75

BUY the 2015 Jan $40 call (HIG150117C40)

- or -

BUY the 2016 Jan $40 call (FFIV160115C40)

Option Format: symbol-year-month-day-call-strike

Originally listed on the Watch List: 06/08/14


V.F. Corp. - VFC - $61.64

Comments:
06/15/14: VFC had a rough week. It's two dollar drop erased four weeks of hard fought gains. Shares settled on Friday at technical support on its 50-dma.

Last week there was chatter that Lululemon (LULU) is a takeover target and VFC might be a buyer.

Overall I don't see any changes from my earlier comments.

Earlier Comments: May 18, 2014:
VFC is in the consumer goods sector. The company makes apparel and footwear for sale in the U.S. and Europe. Products include handbags, luggage, backpacks, accessories. Major brands include The North Face, Vans, Timberland, Kipling, Jansport, Reef, Smartwool, Eastpak, Wrangler, Lee, just to name a few.

After big gains in 2013 shares of VFC have been consolidating sideways. The company split their stock 4-for-1 back in December 2013. VFC guided lower back in February but the market reaction was a one-day event. Shares have since recovered. Their most recent report was bullish with VFC beating estimates. That's significant since so many apparel makers blamed the weather on a terrible Q1.

There has been growing speculation that VFC might be Lululemon (LULU) or another athletics apparel brand. Normally the acquiring company's stock goes down on a merger announcement but lately Wall Street has been sending the acquirer's stock higher on positive M&A news.

Technically shares look poised to breakout from their five-month consolidation. The Point & Figure chart is already bullish and forecasting an $80 target.

I am suggesting we wait for VFC to close above $64.25 and then buy calls the next day with a stop loss at $59.75. Our long-term target is the $75.00 region.

Breakout trigger: Wait for a close above $64.25
buy calls the next day with a stop loss at $59.75

BUY the 2015 Jan $70 call (VFC150117C70)

- or -

BUY the 2016 Jan $70 call (VFC160115C70)

Option Format: symbol-year-month-day-call-strike

Originally listed on the Watch List: 05/18/14