Editor's Note:

A number of our candidates hit new 52-week highs last week. Most of them have been showing relative strength. We want to be ready to buy the pull back.


New Watch List Entries

EMC Corp.

Imation Corp.

Trimble Navigation


Active Watch List Candidates

CRS - Carpenter Technology

RT - Ruby Tuesday, Inc.

TSCO - Tractor

XHB - S&P Homebuilder ETF


Dropped Watch List Entries

I am dropping the FXB as a watch list candidate.


New Watch List Candidates:

EMC Corp. - EMC - close: 18.61 change: -0.03 stop: 16.24

Technology stocks have been a key component of the market's advance. EMC participated with a new 52-week high after it broke out from its $16-18 trading range two weeks ago. I'm suggesting we buy LEAPS on the dip. Use a pull back to $17.75 as our entry point. If triggered our long-term target is $22.50. We'll use a tight stop at $16.24. FYI: The Point & Figure chart is bullish with a $34.50 target. (Readers may want to buy 2012 calls and aim higher)

Company Info:
EMC Corporation (NYSE: EMC) is the world's leading developer and provider of information infrastructure technology and solutions that enable organizations of all sizes to transform the way they compete and create value from their information. (source: company press release or website)

Buy-the-Dip trigger: $17.75

BUY the 2011 January $20.00 LEAP CALL (symbol: VUE1122A20)

Chart of EMC:


Imation Corp. - IMN - close: 11.17 change: +0.46 stop: 8.99

Shares of IMN have been showing relative strength for a few weeks now. The stock has pushed through resistance near $9.50, the $10.00 level, the $10.50 area and now the $11.00 mark. Each one had been resistance in the past. After building a base in the $8.00-10.00 zone for the last several months IMN should be poised for a sustained rally higher but we don't want to chase it here.

I am suggesting we buy the stock (or calls) on a dip at $10.15. If triggered our first target is $12.25. Our second target is $14.25. FYI: The Point & Figure chart is bullish with a $17.50 target.

Company Info:
Imation is a leading global developer and marketer of branded products that enable people to capture, save and enjoy digital information. Our world-class portfolio of digital storage products, audio and video electronics and accessories reaches customers through a powerful global distribution network. Our goal is a company with strong commercial and consumer businesses and continued long-term growth and profitability that creates shareholder value. Imation Corp.'s global brand portfolio, in addition to the Imation brand, includes the Memorex brand, one of the most widely recognized names in the consumer electronics industry, famous for the slogan, "Is it live or is it Memorex?" and the XtremeMac brand. Imation is also the exclusive licensee of the TDK Life on Record brand, one of the world's leading recording media brands. (source: company press release or website)

Buy-the-Dip trigger: $10.15

BUY the 2010 October $12.50 call (symbol: IMN1016J12.5)

-or-

Buy the IMN stock at $10.15

Chart of IMN:


Trimble Navigation - TRMB - close: 28.28 change: +0.33 stop: 23.95

TRMB is another technology stock that has really done well in the market's recent move higher. Friday's performance looks like a short-term top. I'm expecting a correction and we want to be ready to buy the dip. Broken resistance near $26.00 should offer new support. I'm suggesting a trigger to buy calls at $26.05. If triggered we'll use a stop loss at $23.95. Our first target is $29.95. Our second target is $32.25. FYI: The P&F chart is bullish with a $42 target.

Company Info:
Trimble provides positioning solutions enabling professionals in engineering and construction, surveying, agriculture, fleet management and field service to be more productive by revolutionizing their work processes. Trimble is transforming the way work is done through the application of innovative positioning. Trimble uses GPS, lasers, optical, and inertial technologies, as well as wireless communications and application specific software to provide complete solutions that link positioning to productivity. (source: company press release or website)

Buy-the-Dip trigger: $26.05

BUY the 2010 August $30 calls (symbol: TUH1021H30)

Chart of TRMB:


Active Watch List Candidates:


Carpenter Technology - CRS - close: $35.21 change +1.13

Shares of CRS continue to show relative strength and the stock hit new 52-week highs last week. I still don't want to chase this rally. CRS is overbought. The market will eventually see a correction. That's when we want to be ready to buy the pull back. I am raising our trigger to open bullish positions to $30.75.

CRS can be a volatile stock so a pull back toward $30.75 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.

Buy-the-Dip trigger: $30.75

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

Chart of CRS:


Ruby Tuesday Inc. - RT - close: $10.47 change: -0.17

The rally in RT has stalled and yet there has been almost zero profit taking. Shares are drifting sideways in a very narrow range. This won't last. I don't see any changes from my prior comments. 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.

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: 59.29 change: -0.30

TSCO has been able to extend its gains. The stock is up six weeks in a row and very overbought. We want to jump on board when the market corrects. I'm suggesting a trigger to buy calls on a dip at $55.25. If triggered our first target is $69.00. We'll use a stop loss at $49.75.

Buy-the-Dip trigger: $55.25

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

Chart of TSCO:


FXB - CurrencyShares British Pound Sterling $149.64 -2.21

I am giving up on the FXB. We had the right idea about this currency ETF declining but couldn't get the right entry point. More nimble traders may want to consider short-term trades but that's a volatile bet. I am dropping FXB as a watch list candidate. Our trigger to buy puts was never hit.


Homebuilders ETF - XHB - close: 16.54 change: -0.32

XHB came close but never quite hit our trigger to buy LEAPS. The rally failed near the $17.00 level and now XHB is retreating. I am going to keep our entry point to buy LEAPS at $17.25. However, if the XHB produces a nice rebound from its 200-dma we might jump in on the bounce.

In the meantime if the XHB hits our trigger at $17.25 we'll use a stop at $14.49. Our first target is $21.00. Our second target is $23.90.

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: