New Watch List Entries

AKAM - Akamai Technologies

CHKP - Check Point Software

Active Watch List Candidates

None, see below.

Dropped Watch List Entries

GD graduated to our active play list.

VFC met our entry point requirement on Friday and has been moved to our new play section.

New Watch List Candidates:

Akamai Technologies - AKAM - close: 62.47

Company Info

This company handles one third of the traffic on the Internet and yet most people have probably never heard of them. Who are they? According to the company website, "Akamai is the leading provider of cloud services for helping enterprises provide secure, high-performing user experiences on any device, anywhere. If you've ever shopped online, downloaded music, watched a web video or connected to work remotely, you've probably used Akamai's cloud platform."

The company has been growing. AKAM has beaten Wall Street's estimates every quarter this year. Back in May they raised guidance. Their latest quarterly results came out on July 30th and revenues were up +26%.

Bloomberg recently ran an article suggesting AKAM is a potential takeover target by Chinese Internet giant Alibaba (BABA). After BABA IPOs later this month they company will be flush with cash and might spend some of its $8 billion on acquisitions.

Shares of AKAM were also upgraded recently with a $70 price target. Currently shares are in a long-term up trend and nearing 14-year highs.

I am suggesting we wait for AKAM to close above $63.25 and then buy calls the next morning. I prefer the 2016 calls. If you choose the 2015s we'll have to exit in a few months.

Breakout trigger: Wait for a close above $63.25
Then buy calls the next morning with a stop at $59.45

BUY the 2015 Jan $65 call (AKAM150117C65) current ask $3.05

- or -

BUY the 2016 Jan $70 call (AKAM160115c70) current ask $6.80

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

Chart of AKAM:

Originally listed on the Watch List: 09/07/14

Checkpoint Software Tech. - CHKP - close: 71.80

Company Info

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) current ask $1.90

- or -

BUY the 2016 Jan $80 call (CHKP160115c80) current ask $4.70

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

Chart of CHKP:

Originally listed on the Watch List: 09/07/14

Active Watch List Candidates:

Currently we do not have any active watch list candidates.

They have all graduated to our active play list or the new play section.

Please see the new watch list candidates added (above).

In addition to the new watch list candidates above you may want to keep an eye on these stocks below.

Radar Screen:
Here is a list of stocks on my radar screen. These have potential to be LEAPS trades down the road if the right entry point presents itself. In no particular order:


NOTE: I would not consider positions in FDX until after we see how the market reacts to its earnings report (due out September 17th).