New Watch List Entries

CRS - Carpenter Technology

RT - Ruby Tuesday, Inc.

TSCO - Tractor


Active Watch List Candidates

FXB - CurrencyShares British Pound

XHB - S&P Homebuilder ETF


Dropped Watch List Entries

FO and V both graduated from the watch list to the play list.


Editor's Note:

I am seeing an increase in bullish candidates thanks to the market's recent strength. A few stocks that caught my eye this weekend were SFY, CIR, IRC, CVD, NFX, SHAW, CPO and TBL. Readers may want to do some more research and watch these for possible entry points.


New Watch List Candidates:

Carpenter Technology - CRS - close: $34.74 change +1.34

As investors grow more comfortable with the economic rebound the material stocks have been on the move again. CRS rallied to new 52-week highs last week. Shares are testing potential resistance near $35.00 and with the market overbought and due for a dip this could be a spot for CRS to correct. I am suggesting we buy calls on a dip at $30.25. CRS can be a volatile stock so a pull back toward $30.00 could be quick. If triggered we'll use a stop loss at $25.75. Our long-term target is $44.50. I would be tempted to aim higher but CRS only has September calls as the longest ones available. Currently the Point & Figure chart is very bullish with a $57 price target.

Company Info:
Carpenter (NYSE:CRS) is a leader in the development, manufacture and distribution of cast/wrought and powder metal stainless steels and specialty alloys including high temperature (iron-nickel-cobalt base), stainless, superior corrosion resistant, controlled expansion alloys, ultra high-strength and implantable alloys, tool and die steels, and other specialty metals as well as cast/wrought titanium alloys. (source: company press release or website)

Buy-the-Dip trigger: $30.25

BUY the 2010 September $35 calls (symbol: CRS1018I35)

Chart of CRS:


Ruby Tuesday Inc. - RT - close: $10.74 change: +0.20

Is there a recession in consumer spending? You wouldn't notice by the strength of the restaurant stocks. Shares of RT have been showing lots of relative strength with a very significant bullish breakout in the last two weeks. The most past the $9.00-9.50 zone was a big bullish buy signal. Right now the stock is short-term overbought and due for a dip. I am suggesting we use a dip to $9.50 as our entry point. We'll use a stop loss at $7.90.

I am suggesting readers buy the stock but options are available so we will list both. If triggered our first target is $12.25. Our second, longer-term target is $14.75. FYI: The Point & Figure chart is very bullish with a $19 target.

Company Info:
Ruby Tuesday, Inc. has Company-owned and/or franchise Ruby Tuesday brand restaurants in 46 states, the District of Columbia, Guam, and 14 foreign countries. As of March 2, 2010, the Company owned and operated 659 Ruby Tuesday restaurants, while domestic and international franchisees (including Hawaii) operated 168 and 57 restaurants, respectively. (source: company press release or website)

Buy-the-Dip trigger: $9.50

BUY the stock at $9.50

- or -

BUY the 2010 October $10.00 calls (symbol: RT1016J10)

Chart of RT:


Tractor Supply Co. - TSCO - close: 58.30 change: +0.33

TSCO is a specialty retailer that has been screaming higher the last several days. The $54-55 zone was significant resistance and the breakout pushed TSCO to new 52-week highs. We want to jump on board when the market corrects. I'm suggesting a trigger to buy calls on a dip at $54.25. If triggered our first target is $66.00. We'll use a stop loss at $49.75.

Company Info:
Even though we started out serving the needs of farmers and ranchers near Minot, North Dakota, we now make our home in rural communities all across America. In each Tractor Supply store, you’ll find a staff of experts, better known as your friends and neighbors. They’re proud of where they live and even more proud to bring you the products, services and seasoned advice you need out here (source: company press release or website)

Buy-the-Dip trigger: $54.25

BUY the 2010 October $55 call (symbol: QTF1016J55)

Chart of TSCO:


Active Watch List Candidates:


FXB - CurrencyShares British Pound Sterling $151.33 +1.21

The FXB is still trying to bounce. Traders bought the dip again on Wednesday last week. There is a rumor that another aid package for Greece could be announced on Monday and that could lift the euro, which could also lend some strength to the pound.

Look for a bounce toward resistance in the $156-158 zone. More conservative traders are going to want to wait for the bounce to roll over first before initiating positions. Right now our plan is to buy long-term puts at $156.50. If triggered we'll use a stop loss at $160.55. Our first target is $150.00. Our second target is $144.00.

Buy-the-Bounce trigger: $156.50

BUY the 2010 September $150 put (FWK1018U150)

Chart of FXB:


Homebuilders ETF - XHB - close: 16.82 change: -0.05

The homebuilders are still trying to inch higher. The sector could see a flurry of activity as consumers try to close on deals ahead of the April deadline for the current tax credit incentive. Beyond April the sector will need to see some organic improvement, which could happen given the normal spring and summer home buying season.

Currently the plan is to buy LEAPS on a move past 17.00 with a trigger at $17.05. I am adjusting that trigger a little higher to $17.25. More nimble traders might consider trying to buy a dpi or a bounce near $15.50 if the market corrects. If triggered our first target is $21.00. Our second target is $23.90. We'll use a stop at $14.49.

Company Info:
The SPDR S&P Homebuilders exchange traded fund seeks to mimic the performance of the S&P homebuilders industry index.

Breakout trigger: $17.25

BUY the 2011 Jan $17.50 calls (XJL1122A17.5)

-or-

BUY the 2012 Jan $20.00 calls (KHG1221A20)

Chart of XHB: