We're making some adjustments to our watch list tonight and adding a couple of new candidates in the real estate sector.
New Watch List Entries
CBG - CB Richard Ellis Group
KBH - KB Home
Active Watch List Candidates
CSCO - Cisco Systems
HSY - Hershey Co
LTD - Limited Brands Inc
TJX - TJX Cos. Inc.
Dropped Watch List Entries
AGN and ROST graduated to the play list.
New Watch List Candidates:
CB Richard Ellis - CBG - close: 15.22
This commercial real estate stock rallied from the depths of its bear-market lows near 2.50 back in 2009 to almost $30 in January this year. Now the stock has cut those gains in half. I suspect that any bad news has been priced in. CBG has been building a new base for the last two months in the $12.50-15.00 zone.
I am suggesting we wait for CBG to close above $16.00 and then launch bullish positions the next morning with a stop loss at $13.25. Our long-term target is $20.00. More aggressive traders could aim for the 200-dma instead.
FYI: The Point & Figure chart for CBG has turned bullish with a $19.50 target.
NOTE: CBG does not have LEAPS. We're going to speculate with the 2012 March calls.
Trigger: Buy calls on a close above $16.00
BUY the 2012 March $18 call (CBG1217C18)
Chart of CBG:
Originally listed on the Watch List: 10/15/11
KB Home - KBH - close: 6.68
The housing sector still has a long way to go before it's healthy again. Yet it looks like after a multi-month slide from $16 to $5 that KBH has finally hit bottom. Shares have produced a bullish double bottom with the lows in August and October. Now KBH is threatening to breakout past resistance at $7.00. If there is a breakout the stock could see a short squeeze.
The most recent data listed short interest at 52% of the 65 million-share float.
I am suggesting we wait for a close over $7.00 and then buy calls the next day with a stop loss at $5.90. This is an aggressive trade and we want to keep our position size small. Due to KBH's low dollar stock price I am listing "buying the stock" as an alternative trade below since it's the same price as some of the LEAPS we occasionally trade. We will target a move toward $10.00.
NOTE: Nimble traders may want to try and jump in on a dip near $6.00 should KBH pull back that far but you'll want to adjust your stop loss lower.
Trigger: buy calls or the stock on a close above $7.00
Buy shares of KBH
- or -
BUY the 2013 Jan $10 call (KBH1319A10)
Chart of KBH:
Originally listed on the Watch List: 10/15/11
Active Watch List Candidates:
Cisco Systems - CSCO - close: 17.55
CSCO rallied another +5.3% for the week. Shares are up +17.5% from their October lows. We have been waiting for a breakout past the 200-dma. Our plan was to launch bullish positions if CSCO can close above the $17.50 mark. That happened on Friday and we would open positions the following session, which is Monday morning. However, I am ADJUSTING our entry point. Since the trade has not officially opened yet we can still make adjustments. The move past resistance this past week is definitely bullish. Yet I suspect that CSCO's rally may have run out of steam, at least on a short-term basis.
I am adjusting our entry point to buy calls on a dip at $16.65 and we'll move our stop loss down to $14.85.
Our long-term target is $21.75.
Adjusted entry point - Wait for dip to $16.65
BUY the 2013 Jan. $20 call (CSCO1319A20)
10/15/11 We are adjusting our entry point. Wait for a dip to $16.65
10/14/11 CSCO hit our entry point requirement for a close over $17.50.
Chart of CSCO:
Originally listed on the Watch List: 10/08/11
Hershey Co. - HSY - close: 60.04
HSY continues to flirt with a breakout past resistance at $60.00. Friday's close at $60.04 is not very convincing. At the moment our plan is to buy calls the day after HSY closes above $60.25. More conservative investors may want to up their trigger point to $60.50 or even $61.00.
If triggered we'll start with a stop loss at $55.90.
trigger: A close over $60.25
BUY the 2013 Jan $65 call (HSY1319A65)
Originally listed on the Watch List: 09/17/11
Limited Brands, Inc. - LTD - close: 42.66
It is time we adjust our entry point strategy on LTD. The recent trend of better than expected retail sales suggest the consumer is still very much alive in spite of the dour sentiment numbers. Meanwhile the market's strength has lifted LTD toward all-time highs and resistance near $42-43. It seems unlikely that we'll see LTD dip toward $35 any time soon.
I am suggesting we adjust our strategy and buy calls if LTD can close above $43.50. If we do see a close above $43.50 we'll launch positions the next morning with a stop loss at $37.90. I'm listing the 2013 $50 call.
We want to keep our position size small.
Wait for a close above $43.50, then buy calls!
BUY the 2013 Jan $50 call (LTD1319A50)
10/15/11 New Strategy: buy a close over $43.50, stop 37.90
10/01/11 adjusted stop loss to $32.90, if triggered
09/24/11 new trigger @ 35.50, updated 2013 option strike
09/17/11 new trigger @ 37.50, updated option strikes.
Chart of LTD:
Originally listed on the Watch List: 08/27/11
TJX Cos. Inc. - TJX - close: 57.71
I am not giving up on a buy-the-dip entry point for TJX, at least not yet. More aggressive traders may want to consider buying calls on a close above $59.00 or $60.00. We are adjusting our buy-the-dip entry point to $54.00 with a stop loss at $51.45, which is under the 200-dma.
Buy-the-Dip trigger: $54.00
BUY the 2013 Jan $60 call (TJX1319A60)
10/15/11 adjusted entry point to buy the dip at $54.00, stop at $51.45
Originally listed on the Watch List: 09/24/11