It's only been a 5% drop in the S&P 500 but it still looks ugly. We have adjusted some trigger points.
New Watch List Entries
AVY - Avery Dennison
Active Watch List Candidates
BEAV - BE Aerospace Inc.
CHK - Chesapeake Energy Corp.
Cost - Costco Wholesale
ERJ - EMBRAER - Empresa Brasileira de AeronÃ¡utica
ESV - ENSCO Intl. Inc.,
FWLT - Foster Wheeler
IGT - Intl. Game Technology
MEE - Massey Energy Corp.
MTL - MECHEL OAO
MTW - Manitowoc Inc.
TXT - Textron Inc.
Dropped Watch List Entries
SPW & X hit our trigger and graduated to the play list.
New Watch List Candidates:
AVY $ 33.95 -0.78 -- Avery Dennison
Shares of AVY were downgraded on Friday. The analyst believes that the stock has gotten ahead of itself. Given the weak job market and lackluster economic recovery the analyst felt that demand may not be strong enough for AVY's products. I see a stock that has built a strong base over the last several months. AVY was overbought and due for a correction in mid September and now it's seeing that correction. Broken resistance near $30.00 should offer new support and an entry point to hop on the bullish trajectory.
Use a trigger at $30.25 to buy calls and we'll use a relatively tight stop loss at $26.95. Our long-term target is $44.50.
Avery Dennison is a recognized industry leader that develops innovative identification and decorative solutions for businesses and consumers worldwide. The Companyâ€™s products include pressure-sensitive labeling materials; graphics imaging media; retail apparel ticketing and branding systems; RFID inlays and tags; office products; specialty tapes; and a variety of specialized labels for automotive, industrial and durable goods applications. A FORTUNE 500 Company with sales of $6.7 billion in 2008, Avery Dennison is based in Pasadena, California and has more than 32,000 employees in over 60 countries.
(source: company press release or website)
Buy-the-Dip trigger: $30.25
BUY the 2010 January $30 calls (symbol: AVY-AF)
Chart of AVY:
Active Watch List Candidates:
BEAV $18.29 -0.48 -- BE Aerospace Inc.
The correction continues in BEAV. If it breaks the 50-dma there could be a quick decline toward $16.00 and the 100-dma.
If triggered at $16.00 we'll use a stop loss at $13.40.
Buy-the-Dip trigger: $16.00
BUY the 2010 January $15.00 calls (symbol: BQV-AC)
BUY the stock at $16.00
Note: At $16.00 you could just buy the stock instead but the $15 calls will allow you more leverage on your investment.
Chart of BEAV:
CHK $26.70 +0.20 -- Chesapeake Energy Corp.
The energy stocks have begun to correct. CHK has been very resilient in spite of the price for natural gas.
I am suggesting investors buy LEAPS on a dip at $23.50. We'll use a stop loss at $19.90. Our long-term target is $40.00.
Buy-the-Dip trigger: $23.50
BUY the 2011 January $25 calls (symbol: VEC-AE)
Chart of CHK:
COST $56.47 +0.78 -- Costco Wholesale
At the current rate COST is correcting we may never get triggered. The huge gap higher has left air pockets, which COST could quickly fill if the correction continues. I suspect that COST will trade sideways until its earnings report on October 7th, 2009.
Our plan is to buy LEAPS on a dip at $51.50. If triggered we'll use a stop loss at $47.00. Our target is the $65.00 region.
Buy-the-Dip trigger: $51.50
BUY the 2010 January $50 calls (symbol: PRQ-AJ)
Chart of COST:
ERJ $22.57 +0.29 -- EMBRAER - Empresa Brasileira de AeronÃ¡utica S.A.
ERJ has pulled back to the 50-dma. If this market correction continues we have a good chance of getting triggered. If triggered at $20.50 we'll use a stop loss at $17.75. Our target is the $29-30 zone. FYI: The P&F chart is bullish with a $42 target.
Buy-the-Dip trigger: $20.50
BUY the 2010 January $20.00 call (symbol: ERJ-AD)
Chart of ERJ:
ESV $40.00 -0.82 -- ENSCO Intl. Inc.
After three weeks of failing at $43.00 shares of ESV are poised to correct. The stock should find support near its 100-dma around $38.00.
We want to buy LEAPS on a dip at $38.00.
We'll use a stop loss at $34.90. The Point & Figure chart is bullish with a $55.00 target. We're going to aim for the $55-60 zone.
Buy-the-Dip trigger: $38.00
BUY the 2011 January $40 call (VKS-AH)
(More aggressive traders may want to trade January 2010 or March 2010 calls instead)
Chart of ESV:
FWLT $31.14 -1.09 -- Foster Wheeler AG
I'm turning more cautious on FWLT. The stock is testing the 38.2% Fib retracement of the July-September rally but I think the correction will continue. I'm adjusting our trigger to buy LEAPS down from $29.00 to $26.00 and our stop loss to $23.90.
Our bullish target is the $45-50 zone.
Buy-the-Dip trigger: $26.00
BUY the 2011 January $30.00 calls (symbol: ZHF-AF)
Chart of FWLT:
IGT $19.94 -0.28 --- Intl. Game Technology
This is it. IGT is testing the bottom of its bullish channel. Aggressive traders will want to buy bullish positions now. I suspect that IGT will actually correct toward $18.00 so I'm adjusting our trigger to buy LEAPS down to $18.25. We'll move the stop loss down to $16.90.
We only want to open small positions at least 1/2 our normal trade size. Our long-term targets are $25.00 (sell half) and $29.00 (sell half).
Buy-the-Dip trigger: $18.25 *new*
BUY the 2011 January $20.00 call (VGG-AD)
Chart of IGT:
MEE $26.73 +0.13 -- Massey Energy Corp.
The correction in MEE has been pretty sharp and the stock is approaching our trigger at $25.00.
If triggered our stop loss is at $19.95.
NOTE: I would only open half a position at this time. If conditions warrant we can add to it later.
More conservative traders may want to use a stop near $21.75 instead. Our long-term target is the $40.00. Readers may want to consider the 2011 January calls instead.
Buy-the-Dip trigger: $25.00
BUY the 2010 January $25.00 call (MEE-AE)
Chart of MEE:
MTL $16.92 -0.15 -- MECHEL OAO
MTL still looks very overbought and any correction is likely to be a sharp one.
I am adjusting our trigger to $12.75. We'll use a stop loss at $9.75. The Point & Figure chart is bullish with a $27 target. Our long-term target is also $27.00.
Buy-the-Dip trigger: $12.75 *new*
BUY the 2010 April $15.00 calls (symbol: MTL-DC)
or BUY the STOCK @ 12.75
Chart of MTL:
MTW $8.14 -0.59 -- Manitowoc Inc.
The correction in MTW has been a bit faster than I expected. Odds are good the market might keep slipping for another week or more. I am adjusting our trigger to open bullish positions from $8.00 to $7.25.
Our long-term target is $17.00.
Buy-the-Dip trigger: $7.25 *new*
BUY the 2011 January $7.50 calls (symbol: VMT-AU)
or BUY the STOCK at $7.25
Chart of MTW:
TXT $17.51 -0.64 -- Textron Inc.
So far so good. We're looking for a correction toward $15.00.
I'm suggesting investors buy LEAPS on a dip at $15.25. We'll use a stop loss at $11.75 near the simple 200-dma. Our long-term target is the $30 region.
Buy-the-Dip trigger: $15.25
BUY the 2011 January 15.00 call (symbol: XUD-AC)
Chart of TXT: