New Watch List Entries

FDX - FedEx Corp.

HUM - Humana Inc.


Active Watch List Candidates

CHKP - Check Point Software

LLY - Eli Lilly & Co


Dropped Watch List Entries

TGT has been removed from the watch list.



New Watch List Candidates:


FedEx Corp. - FDX - close: 156.12

Company Info

FDX is one of the largest package delivery companies in the world. The company's most recent earnings report showed improvement. FDX beat Wall Street's estimates on both the top and bottom line. Profits were up +24% from a year ago and it was the second quarter in a row that FDX beat estimates.

Management said their 2015 fiscal year was off to a great start. The company has enough demand they have recently raised prices on some services.

The plunge in crude oil and fuel prices is a huge tailwind for FDX. As a transportation company the cost of fuel is a major expense. With oil at four-year lows it should be a boost to FDX margins.

FDX should also benefit from the growth in online shopping. Last year there was a huge last minute surge in Christmas sales that needed to be delivered quickly by companies like UPS and FDX. This year online shopping is expected to grow +17%. That's another bonus for FDX.

The stock has been volatile thanks to the market's big swings but FDX is still respecting its long-term bullish trend of higher lows.

Tonight I am suggesting we wait for a close above $158.00 and buy calls the next morning with a stop loss at $148.50.

Breakout trigger: Wait for a close above $158.00
Then buy calls the next morning with a stop at $148.50

BUY the 2016 Jan $170 call (FDX160115c170) current ask $11.85

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

Chart of FDX:

Originally listed on the Watch List: 10/19/14


Humana Inc. - HUM - close: 128.23

Company Info

HUM is in the healthcare sector. The company offer health insurance. Right now that's a good spot to be as the system irons out the kinks in the Affordable Care Act (a.k.a. Obamacare). Thus far Obamacare has been a boon to insurers as more and more Americans sign up for health insurance.

Shares of HUM did see a pullback from its recent highs near $136 down to $121 (a -11% correction) but now HUM is on the rebound. Even with the pullback HUM still has a long-term bullish trend of higher lows. The point & figure chart is bullish and suggesting a long-term target of $173.00.

Tonight I am suggesting we wait for HUM to close above $130.25 and then buy calls the next morning with a stop loss at $119.75. I do want to warn you that HUM is scheduled to report earnings on November 7th but several of its peers (AET, CI, and WLP) will report earnings in the next two weeks (before the end of October). Their quarterly results and guidance (good or bad) could influence shares of HUM.

Breakout trigger: Wait for a close above $130.25
Then buy calls the next morning with a stop at $119.75

BUY the 2016 Jan $140 call (HUM160115c140) current ask $12.70

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

Chart of HUM:

Originally listed on the Watch List: 10/19/14


Active Watch List Candidates:



Checkpoint Software Tech. - CHKP - close: 66.27

Comments:
10/19/14: Believe it or not but CHKP held up pretty well last week. Traders were buying the dips and the stock posted a gain. The company has earnings coming up on October 23rd. I do not expect to see CHKP meet our entry point requirement by then.

Currently we want to see a close above $72.50 before buying calls but we will re-evaluate after the company's earnings report.

Earlier Comments: September 14, 2014:
CHKP is another technology stock and it is similar to AKAM in that both have beaten earnings estimates every quarter this year and both are trading near 14-year highs. While AKAM facilitates Internet traffic, CHKP seeks to guard its clients against Internet hazards.

The company describes itself as, "the worldwide leader in securing the Internet, provides customers with uncompromised protection against all types of threats, reduces security complexity and lowers total cost of ownership. Check Point first pioneered the industry with FireWall-1 and its patented stateful inspection technology."

"Today, Check Point continues to develop new innovations based on the Software Blade Architecture, providing customers with flexible and simple solutions that can be fully customized to meet the exact security needs of any organization. Check Point is the only vendor to go beyond technology and define security as a business process. Check Point 3D Security uniquely combines policy, people and enforcement for greater protection of information assets and helps organizations implement a blueprint for security that aligns with business needs. Customers include tens of thousands of organizations of all sizes, including all Fortune and Global 100 companies. Check Point's award-winning ZoneAlarm solutions protect millions of consumers from hackers, spyware and identity theft."

It feels like a week doesn't go by that we don't hear about another major hacking scandal in the business world. It's not going away and corporations have to constantly update their cyber defense. CHKP has been working cyber security since 1993.

Shares of CHKP spent much of this year consolidating gains from 2013. However, the last week of August produced a crucial breakout past resistance near $70.00. Tonight I am suggesting a trigger to buy calls if CHKP can close above $72.50. We'll start with a stop at $69.45. The point & figure chart is bullish and currently forecasting an $89.00 target. We'll start with a long-term target in the $95-100 zone (our target to exit the 2015 calls will be lower).

Breakout trigger: Wait for a close above $72.50
Then buy calls the next morning with a stop at $69.45

BUY the 2015 Jan $75 call (CHKP150117C75)

- or -

BUY the 2016 Jan $80 call (CHKP160115c80)

10/05/14 Friday's move might signal the end of the pullback.
Option Format: symbol-year-month-day-call-strike

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


Eli Lilly & Co - LLY - close: 62.58

Comments:
10/19/14: LLY has broken below technical support at its 100-dma. Yet the long-term trend of higher lows still works - at least for now.

LLY has earnings coming up on October 23rd. I doubt we'll see shares meet our entry point requirement with a close above $66.25 by then. We will re-evaluate our entry point strategy after we see the company's earnings report.

Earlier Comments: October 5, 2014:
You may have noticed that stocks have turned a bit more volatile recently. That could be a new trend after as investors try to look ahead into 2015 and ponder a market environment without a QE program by the Federal Reserve. That's why tonight we're looking at a stock like LLY, which is traditionally considered a more safe haven trade.

LLY has been building on its longer-term trend of higher lows. Plus the company has seen some good news. The U.S. FDA recently approved LLY's new once-a-week injectable diabetes drug for adults with type 2 diabetes. This new treatment, Trulicity, helps improve the patients' blood sugar levels. There are an estimated 26 million Americans who suffer with type 2 diabetes. LLY is also teaming up with AstraZeneca to work on a Alzheimer's treatment.

The two-week pullback in shares of LLY was pretty mild and investors are already buying the dip. We want to hop on board if this rebound continues. Tonight we are suggesting investors wait for LLY to close above $66.25 and then buy calls the next morning with a stop loss at $61.90.

Please note that LLY is due to report earnings on October 23rd. You may want to wait on launching any positions until after we see how the market reacts to LLY's results.

trigger: Wait for LLY to close above $66.25
Then buy calls the next morning with a stop at $61.90

BUY the 2016 $70 call (LLY160115c70)

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

Originally listed on the Watch List: 10/05/14


Target Corp. - TGT - close: 59.07

Comments:
10/19/14: The drop in crude oil and gasoline prices to four-year lows should be very bullish for consumer spending this holiday season. Yet this development has not stopped the retail stocks like TGT from getting hammered in the market sell-off.

The recent breakdown under $60 and its 200-dma is bearish. Tonight we are removing TGT from the watch list.

Trade did not open.

10/19/14 removed from the watch list. Suggested trigger was a close above $63.60

Originally listed on the Watch List: 10/05/14