New Watch List Entries
ANR - Alpha Natural Resources, Inc.,
CLF - Cliffs Natural Resources Inc.,
Active Watch List Candidates
BEAV - BE Aerospace Inc.
BG - Bunge Limited
CNX - Consol Energy Inc.
DISH - Dish Network Corp.
ERJ - EMBRAER - Empresa Brasileira de AeronÃ¡utica
IGT - Intl. Game Technology
MEE - Massey Energy Corp.
MICC - Millicom Intl. Cellular
WLT - Walter Energy Inc.
X - United States Steel Corp.
Dropped Watch List Entries
We did not drop any watch list candidates this week.
New Watch List Candidates:
ANR $36.09 -0.57 - Alpha Natural Resources, Inc.
ANR is another coal company that's been showing a lot of strength. Shares just broke out from a two-week consolidation. While it would be tempting to buy LEAPS now the industry and the markets are overbought. The plan is to buy LEAPS on a dip near what should be support around $30.00. If triggered our long-term target is the $45.00-50.00 zone.
Alpha Natural Resources is one of America's leading producers of coal, which is an essential part of our daily lives. From generating light and heat to helping make the steel that goes into our roads, bridges and buildings, coal powers our future. In fact, coal generates 40% of the world's electricity and powers almost 70% of global steel production.
(source: company press release or website)
Buy-the-Dip trigger: $31.00
BUY the 2010 January $35.00 calls (symbol: ANR-AG)
BUY the 2011 January $40.00 calls (symbol: VJV-AH)
Chart of ANR:
CLF $28.16 -1.05 -- Cliffs Natural Resources Inc.
CLF is another metal producer that's building a long-term bottom. I'm suggesting two different trigger points to launch positions. We want to buy a dip at $23.50 or a breakout over $32.50. If triggered our long-term target is the $50.00-55.00 zone. We'll use a stop loss at $19.40 for the dip entry point and a stop at $24.50 for the breakout entry point.
Cliffs Natural Resources Inc. (NYSE: CLF) is an international mining and natural resources company. We are the largest producer of iron ore pellets in North America, a major supplier of direct-shipping lump and fines iron ore out of Australia and a significant producer of metallurgical coal. With core values of environmental and capital stewardship, our colleagues across the globe endeavor to provide all stakeholders operating and financial transparency as embodied by the Global Reporting Initiative (GRI) framework.
(source: company press release or website)
Buy-the-Dip trigger: $23.50
Breakout trigger: $32.55
BUY the 2010 January $30.00 call (CLF-AF)
Chart of CLF:
Active Watch List Candidates:
BEAV $17.63 -0.55 -- BE Aerospace Inc.
BEAV managed to hit new highs for the year. I'm upping our trigger to buy LEAPS from $14.00 to $15.00. I'm raising the stop loss to $11.90.
Buy-the-Dip trigger: $15.00
BUY the 2010 January $15.00 calls (symbol: BQV-AC)
BUY the 2010 January $17.50 calls (symbol: BQV-AW)
BUY the stock at $15.00
Note: At $15.00 you could just buy the stock instead but the $15 calls will allow you more leverage on your investment.
Chart of BEAV:
BG $67.03 +1.00 -- Bunge Limited
BG management has decided to take advantage of their stock's strength and raise capital. The stock gapped down last week when it was announced BG would sell another 10.5 million shares of common stock at $65.50 a share. The low for the week was $65.20.
Our plan hasn't changed. We want to wait for a dip near its long-term bullish up trend. If triggered we're going to aim for the $85-90 zone. Currently the Point & Figure chart is bullish with a $94 target.
Buy-the-Dip trigger: $61.00
BUY the 2010 January 70 calls (BGW-AN)
Chart of BG:
CNX $40.24 -1.13 -- Consol Energy Inc.
Coal stocks were generally flat with a bullish bias last week. Not CNX. The stock soared to new six-week highs. If shares are showing this much relative strength we need to raise our entry point. A 50% correction of the July-August rally would be a pull back to $35.00. I'm upping our trigger to buy LEAPS to $35.25. We'll use a stop loss at $28.50. If triggered we want to sell half at $48.50 and half at $57.50.
Buy-the-Dip trigger: $35.25
BUY the 2010 January 35.00 calls (symbol: CNX-AG)
BUY the 2011 January 40.00 calls (symbol: VTL-AH)
Chart of CNX:
DISH $17.75 -0.24 -- Dish Network Corp.
It looks like DISH may have produced a short-term top with last Monday's post-earnings pop to $20.00. Shares have been consolidating lower ever since. I still believe that consumers will continue to cocoon in their homes as they deal with these tough economic times and that makes DISH an attractive bet.
We want to buy LEAPS on a dip into the $16.00-15.00 zone. The official trigger will be $16.25 and we'll use a stop loss at $13.85. Our long-term target is the $25-30 zone.
Buy-the-Dip trigger: $16.25
BUY the 2010 January $15.00 calls (symbol: HSW-AC)
(or consider the 2011 Jan. $20 calls)
Chart of DISH:
ERJ $22.04 -0.96 -- EMBRAER - Empresa Brasileira de AeronÃ¡utica S.A.
The rally in ERJ also appears to be losing steam. Shares hit $24.00 last week but short-term technicals are rolling over. We have a trigger to buy a dip at $18.50. Our target is the $29-30 zone. I'm suggesting a stop loss at $15.45.
Buy-the-Dip trigger: $18.50
BUY the 2010 January $20.00 call (symbol: ERJ-AD)
Chart of ERJ:
IGT $19.06 -0.52 --- Intl. Game Technology
Shares of IGT are slowly correcting as well. A 50% correction of the July-August rally is about $17.50. I am suggesting that readers buy LEAPS on a dip into the $17.50-16.00 zone. Our long-term target is the $25.00-30.00 zone.
Buy-the-Dip trigger: $17.50 (17.50-16.00 zone)
BUY the 2010 January $17.50 call (IGT-AW) -or-
BUY the 2010 January $20.00 call (IGT-AD) -or-
BUY the 2011 January $20.00 call (VGG-AD)
Chart of IGT:
MEE $29.56 -0.98 -- Massey Energy Corp.
MEE, just like CNX, has rallied to new highs. The relative strength is great but it's tough to plan a long-term entry point. A 50% retracement of the July-August rally is about $22.50-23.00. I am upping our trigger to buy LEAPS to $23.50. We'll raise the stop loss to $17.99. Our long-term target is the $35.00-40.00 range. The P&F chart agrees and points to a $37.50 target.
Buy-the-Dip trigger: $23.50 *new*
BUY the 2010 January $25.00 call (MEE-AE)
BUY the 2011 January $30.00 call (VHK-AF)
Chart of MEE:
MICC $71.01 -1.12 -- Millicom Intl. Cellular
Nothing has changed for us. MICC has started to correct but we need to see a deeper pull back. It might take a few weeks but we want to buy a dip near support around $62.50.
Buy-the-Dip trigger: $62.50
BUY the 2010 January $70 call (symbol: CQD-AN) *new*
Chart of MICC:
WLT $54.41 -2.04 -- Walter Energy Inc.
WLT is another high-flying coal stock. Shares are extremely overbought after several weeks of gains. There might be some support near $45.00 but WLT is likely to overcorrect. We'll keep our trigger at $41.00 for now. We'll use a stop loss at $34.40. Our long-term target is $60.00.
Buy-the-Dip trigger: $41.00
BUY the 2010 January 50.00 call (WLT-AJ)
BUY the 2011 January 50.00 call (OZE-AJ)
Chart of WLT:
X $46.14 -1.18 United States Steel Corp.
Steel maker X also rallied to new highs last week. Shares closed over the $45.00 level and their exponential 200-dma. It looks like shares have produced a very long-term bottom over the last few months and we want to be patient and wait for a correction. The plan is to buy LEAPS at $37.50. Traders can use the $37.50-35.00 zone to launch positions. We'll start with a stop loss at $32.40. Our target is the $60-70 zone. Currently the Point & Figure chart is bullish with a $64 target.
Buy-the-Dip trigger: $37.50
BUY the 2010 January $40 calls (symbol: FBJ-AH)
Chart of X: