In addition to tonight's new watch list candidates I wanted to draw your attention to a few more stocks.
BAC has broken out to new five-month highs. I'd keep my eye on this stock for a correction, which might happen after its earnings report on April 16th.
The trend in Goldman Sachs (GS) is bullish and a move past $182 might be a bullish entry point. I hesitate to open positions if we're expecting a market correction in the second half of April. GS reports earnings on April 20th.
MCD has broken out to new multi-year highs. We had it on our watch list a while ago and dropped it. The company reports earnings on April 21st. This might be a buy on any correction.
Some of the energy stocks are starting to show some relative strength and COP just broke out past resistance at the $55.00 mark. I'm not sure I would chase it here but I would place it on your personal watch list. Earnings are due out on April 28th.
New Watch List Entries
APA - Apache Corp.
DE - Deere & Co.
Active Watch List Candidates
CIR - CIRCOR Intl.
CRS - Carpenter Technology
CVD - Covance Inc.
EMC - EMC Corp.
IMN - Imation Corp.
MDR - McDermott Intl.
MICC - Millicom Intl.
RT - Ruby Tuesday, Inc.
SAFM - Sanderson Farms Inc.
TRMB - Trimble Navigation
Dropped Watch List Entries
TSCO was dropped.
New Watch List Candidates:
APA - Apache Corp. - close $106.76 change: +0.47
Crude oil looks like it's in breakout mode as we head toward the summer driving season. At the same time it looks like natural gas may have finally found a bottom. Bulls have tried betting on a bottom in natural gas before and they always lost as rising natural gas inventories sent the commodity lower. Now it looks like gas might have found a bottom as traders start betting on higher usages rates to keep consumers cool during the warmer summer months. The combination of rising oil and rising natural gas should be a bullish recipe for APA.
Shares of APA have been consolidating sideways since the peak in January but the consolidation has a neutral pattern of lower highs and higher lows. I suspect that APA will breakout higher. Bulls should have the upper hand but I want to see confirmation. I am suggesting we use a trigger at $110.50 to buy calls on the stock. If triggered at $110.50 we'll use a stop loss at $102.45. Our first target is $124.75.
FYI: Readers should know that APA is due to report earnings at the end of April but the April 29th announcement date is unconfirmed. Furthermore on Friday, April 9th there was a news story out that APA was in the final talks to buy the shallow water Gulf of Mexico assets from rival Devon Energy for $750 million. Lastly the Point & Figure chart is bullish and is currently forecasting a long-term target of $127.00.
Apache Corporation is an independent energy company that explores for, develops and produces natural gas, crude oil and natural gas liquids. Our mission is to grow a profitable company for the long-term benefit of our shareholders by building a portfolio of core areas which provide long-term growth opportunities.
(source: company press release or website)
Breakout trigger: $110.50
BUY the 2010 October $115 calls (APA 10J115.00)
Chart of APA:
DE - Deere & Co. - close: 61.68 change: +1.06
Shares of DE closed just under their 52-week highs near the $62 level on Friday. The trend is up and investors remain bullish on industrial stocks as they bet on the global recovery. However, instead of buying a breakout I am suggesting readers wait for a correction. Earnings season is about to start and after several weeks of non stop gains in the market stocks could be poised for a sell-off following their earnings results.
I am suggesting we use a dip to $55.50 as our entry point to buy LEAPS on DE. If you're really patient you could try waiting for a dip toward the rising 200-dma. If we are triggered at $55.50 we'll use a stop loss at $49.49. Our first target is $69.75. FYI: The Point & Figure chart is bullish with a long-term target of $89.00.
Deere & Company, founded in 1837 (collectively called John Deere), has grown from a one-man blacksmith shop into a corporation that today does business around the world and employs more than 50,000 people. The company continues to be guided, as it has been since its beginning, by the core values exhibited by its founder: integrity, quality, commitment and innovation. How We're Organized - John Deere consists of three major business segments (agriculture and turf, construction and forestry, and credit).
(source: company press release or website)
Buy-the-Dip trigger: $55.55
BUY the 2011 January $60 call (DE 11A60.00)
- or -
BUY the 2012 January $60 call (DE 12A60.00)
Chart of DE:
Active Watch List Candidates:
CIRCOR Intl. - CIR - close: 33.24 change: +0.22
CIR has been slowly trying to bounce and the trend of lower highs is still bullish. However, two weeks ago the stock formed a bearish reversal and this past week has done nothing to change that. I am still expecting a correction toward the $30.00 region, which should offer some support.
More conservative traders may want to wait and buy calls on a bounce from $30.00 instead of buying a dip to $30. If triggered we'll use a stop at $27.75. Our long-term target is the $40 area. FYI: The P&F chart is pointing to a $47 target.
NOTE: I would only start with half a position since the market has not started to correct yet and CIR has. We want to keep our exposure limited.
Buy-the-Dip trigger: $30.50
BUY the 2010 NOV $35 calls (CIR 10K35.00)
Chart of CIR:
Carpenter Technology - CRS - close: $38.63 change +0.13
The upward momentum in CRS is not going to last forever. Shares are up six weeks in a row and up eight out of the last night weeks. I strongly suspect the $40.00 level will act as round-number, psychological resistance, especially after a 50% rally off its February lows. I'm betting that any correction in CRS is going to be pretty sharp. We want to wait for a pull back toward the $30.00 level. If triggered we'll use a stop at $27.45. Our long-term target is $44.50. Currently the Point & Figure chart is very bullish with a $57 price target.
Buy-the-Dip trigger: $30.00
BUY the 2010 September $35 calls (CRS 10I35.00)
Chart of CRS:
Covance Inc. - CVD - close: 61.61 change: +0.20
Traders bought the dip near $60.00 again. I have to admit that shares of CVD still look bullish in spite of the four-week sideways consolidation above $60.00. I would be tempted to buy a breakout over $63.00. However, we're expecting a market correction following the second week of earning season. If we're patient we should get a much better entry point. The rising 200-dma near $55.00 should offer strong support. I am moving our trigger to buy calls down to $56.00. We'll adjust our stop loss to $53.45. If triggered our long-term target is $74.50. Currently the Point & Figure chart is bullish with a $79 target.
Buy-the-Dip trigger: $56.00
BUY the 2010 November $60.00 calls (CVD 10K60.00)
Chart of CVD:
EMC Corp. - EMC - close: 18.54 change: +0.14
Shares of EMC continue to bounce around the $18-19 zone. More aggressive traders may want to consider opening bullish positions on a breakout past $19.10. The March 25th high was $19.04. I'm still betting on a market correction sometime in the next three to five weeks. The 200-dma should offer support. I am suggesting we use a trigger to buy call LEAPS at $17.25 with a stop loss at $15.90 (adjusted from last week). Our long-term target is $22.50. FYI: The Point & Figure chart is bullish with a $34.50 target. (Readers may want to buy 2012 calls and aim higher)
Please note our new option.
Buy-the-Dip trigger: $17.25
BUY the 2011 January $17.50 LEAP CALL (EMC 11A17.50)
- or -
BUY the 2012 January $20.00 LEAP call (EMC 12A20.00)
Chart of EMC:
Imation Corp. - IMN - close: 11.45 change: +0.00
As the market melts up to new relative highs traders continue to buy the dips in IMN. Eventually this stock is going to correct and we're going to be ready for it. Shares should have support near $10.00 and the $9.50 levels.
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. We'll use a stop loss at $9.24. FYI: The Point & Figure chart is bullish with a $17.50 target.
Buy-the-Dip trigger: $10.15
Buy the IMN stock at $10.15
BUY the 2010 October $12.50 call (IMN 10J12.50)
Chart of IMN:
McDermott Intl. - MDR - close: 27.76 change: +0.57
MDR is still trending higher as traders buy the dips near its rising 10-dma. The stock looks poised to breakout past resistance near the $28.00 level. However, I want to caution readers that we are facing a good chance the market could correct following earnings season this month. If the market corrects MDR will likely follow it lower.
We can still choose to open bullish positions on a breakout higher but I am suggesting we only open half your normal position size (or less). We'll keep our trigger at $28.25 but keep in mind I do expect a pull back eventually - probably toward the $26-25 zone. More patient traders can wait for the pull back before initiating positions.
If triggered at $28.25 I am suggesting a stop loss at $23.90 (adjusted from last week). Our long-term target is $37.50. Investors may want to consider 2012 LEAPS and aim higher. Currently the Point & Figure chart is suggesting a $37 target.
Breakout trigger: $28.25
BUY the 2011 JAN $30.00 CALLS (MDR 11A30.00)
Chart of MDR:
Millicom Intl. - MICC - close: 89.88 change: +1.02
MICC showed almost no change for the week but traders did buy the dip at its rising 30-dma on Thursday. The early April spike higher continues to look like a bearish reversal/failed rally pattern. We want to be patient here and wait for a correction. Broken resistance near $80.00 should offer support.
I am suggesting a trigger to buy LEAPS at $81.00. If triggered we'll use a stop loss at $74.00. Our long-term target is $99.50 and the $109.00 levels.
Buy-the-Dip trigger: $81.00
BUY the 2011 January LEAP $90.00 calls (MICC 11A90.00)
Chart of MICC:
Ruby Tuesday Inc. - RT - close: $11.71 change: -0.67
RT reported earnings this past week. The company beat Wall Street's estimates and raised their 2010 guidance. The stock reacted by surging to $12.55 on Thursday. The stock was hit with profit taking on Friday in what looks like a big failed rally/reversal pattern. The trend is certainly up but RT is overbought and due for a correction. We want to wait for that correction. Please note that I am raising our trigger to buy the stock from $9.00 to $9.50. We'll raise the stop loss to $8.45.
It could take a few weeks for RT to correct low enough to finally hit our entry point. Nimble traders could look into short-term bearish positions. If we are triggered at $9.50 our first target is $12.00. Our longer-term target is $14.75.
Buy-the-Dip trigger: $9.50
BUY the stock at $9.50
- or -
BUY the 2010 October $10.00 calls (RT 10J10.00)
Chart of RT:
Sanderson Farms Inc. - SAFM - close: 55.98 change: +0.53
Shares of SAFM continue to drift higher in a bullish channel of higher lows and higher highs but the stock has yet to challenge the late March resistance. That could happen shortly. I still don't want to chase it so we'll wait for a correction. Right now the plan is to buy calls on a dip at $48.50 with a stop loss at $43.90. If triggered our target is $59.75. I would aim higher but we only have a few months.
Buy-the-Dip trigger: $48.50
BUY the 2010 NOV $55 calls (SAFM 10K55.00)
Chart of SAFM:
Trimble Navigation - TRMB - close: 28.98 change: +0.25
TRMB was downgraded on Wednesday but traders quickly jumped in to buy the dip near $27.50. Now the stock is right back near its highs and looks poised to rally higher. More aggressive traders may want to consider going long on a move over $29.25. I still think the stock will correct when the market corrects. It could be two or three weeks down the road but if we're patient it will make a huge difference in our entry point and potential profitability. Broken resistance near $26.00 should be support. If you're really conservative you could wait for a dip closer to $25.00. I'm suggesting a trigger for bullish positions 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.
Please note our new options (Novembers)
Buy-the-Dip trigger: $26.05
BUY the 2010 November $30 calls (TRMB 10K30.00)
Chart of TRMB:
Tractor Supply Co. - TSCO - close: 66.46 change: -0.02
Whoa! It looks like our TSCO play is dead before it even started. Shares have rallied with out us. We were waiting to buy a dip near support. Yet TSCO has exploded higher this past week thanks to management raising guidance. The company now expects Q1 earnings in the 22-24 cent range compared to Wall Street's estimates of just 1 cent. The stock gapped open higher. I am dropping TSCO as a bullish candidate for now.
Trigger was never hit. Dropped as a candidate.
Buy-the-Dip trigger: $55.25
Chart of TSCO: