New Watch List Entries

None.


Active Watch List Candidates

DSX - Diana Shipping Inc.

ESV - ENSCO Intl. Inc.,


Dropped Watch List Entries

BQI graduated to our play list.


New Watch List Candidates:

Editor's Note:

I have been very reluctant to add new stocks to the watch list. Upward momentum in the market has stalled. The technical indicators continue to deteriorate. Leadership is narrowing, which is another way of saying more and more sectors are beginning to roll over or breakdown.

Over the last few months corrections in the S&P 500 have been in the 3-5% range. However, a real correction or retracement would be a pull back toward the 950 level (although secretly I hope for stronger support at the 1,000 level).

Another challenge when it comes to looking for bullish candidates is time frame. The newsletter's goal is to provide 6-month to 18-month trades. Yet I am worried that the economy will fall into a double-dip recession in 2010, which could be terrible for the stock market.

I haven't given up yet on finding new candidates. To borrow a popular phrase, "there is always a bull market somewhere". We just have to find it and then wait for the right entry point. There are no new candidates tonight. Hopefully we have a clearer picture on where the market is headed a week from now.

Active Watch List Candidates:


DSX $15.96 -0.39 - Diana Shipping Inc.

Last week was not a great one for DSX. We were expecting a correction but shares went so far as to produce a bearish reversal on both the daily and weekly charts. I'm still expecting support in the $14-12 zone so our plan is still active.

We want to use a dip at $14.50 as an entry point to buy LEAPS. If we're triggered at $14.50 I'm setting our long-term target at $24.00. We'll use a stop loss at $11.85.

Buy-the-Dip trigger: $14.50

BUY the 2011 January $15.00 LEAPS (symbol: XDJ-AC)

Chart of DSX:


ESV $44.50 -1.28 -- ENSCO Intl. Inc.

ESV is slowly correcting lower. The stock should have support near $42.00 and its 100-dma. That's also where you'll find the trendline off its 2009 lows. We have a trigger at $42.50. If triggered at $42.50 we'll use a stop at $37.25. Our target is the $55-60 zone.

Buy-the-Dip trigger: $42.50

BUY the 2011 January $45 call (VKS-AI)

Chart of ESV: