Editor's Note:

We're still looking for a dip to launch positions but our new candidates could be triggered this week.


New Watch List Entries

CLR - Continental Resources

LMT - Lockheed Martin

WLL - Whiting Petroleum


Active Watch List Candidates

APA - Apache Corp.

CIR - CIRCOR Intl.

CRS - Carpenter Technology

DE - Deere & Co.

EMC - EMC Corp.

IMN - Imation Corp.

MICC - Millicom Intl.

RT - Ruby Tuesday, Inc.

SAFM - Sanderson Farms Inc.

TRMB - Trimble Navigation

WLT - Walter Energy Inc.


Dropped Watch List Entries

CVD has been dropped as a watch list candidate.


New Watch List Candidates:

Continental Resources - CLR - close: 47.65 change: +2.22

Energy stocks are on the move again. CLR caught my eye as shares appear to breakout from the top of its sideways trading range. I'm surprise the stock has not performed better given the company's recent string of better than expected earnings results. CLR reports earnings again the first week of May. More aggressive traders may want to consider buying calls on a rally past $48 or even the $50 level. I am suggesting we wait for a dip. We'll get a better entry point on the option if we can launch positions on a dip near $45.00. I'm suggesting a trigger at $45.25. If triggered we will use a stop loss at $39.75. Our bullish target is $59.00.

FYI: I am suggesting if we do get triggered that readers only launch a half position (or smaller) since the market remains so overbought.

Company Info:
Continental Resources is an independent oil and natural gas exploration and production company with operations in the Rocky Mountain, Mid-Continent and Gulf Coast regions of the United States. We focus our exploration activities in large new or developing plays that provide opportunities to acquire large, undeveloped acreage positions for future drilling operations. We have been successful in targeting unconventional resource plays, such as the Bakken Shale in Montana and North Dakota, where horizontal drilling, advanced fracture stimulation and enhanced recovery technologies facilitate the economic production of oil and natural gas reserves. (source: company press release or website)

Buy-the-Dip trigger: $45.25

Half position or smaller!

BUY the 2010 December $50 calls (CLR 10L50.00)

Chart of CLR:


Lockheed Martin - LMT - close: 86.92 change: +0.25

Shares of LMT just turned in a strong week thanks to a better than expected earnings report. Bigger picture the stock looks ready to continue to rally but short-term LMT is testing resistance near the $87.00 area. More aggressive traders may want to consider buying calls on a breakout over $87-88. We'll get a better price on our options if we can open positions on a dip. I am suggesting we use a trigger at $83.50 to open positions. We'll use a stop loss at $78.50. Our first target is $99.00. Our second, longer-term target is $109.00. FYI: The point & figure chart is bullish and is forecasting a $92 price target.

FYI: I am suggesting if we do get triggered that readers only launch a half position (or smaller) since the market remains so overbought.

Company Info:
Headquartered in Bethesda, MD, Lockheed Martin is a global security company that employs about 140,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. The corporation reported 2008 sales of $42.7 billion. As a global security and information technology company, the majority of Lockheed Martin's business is with the U.S. Department of Defense and the U.S. federal government agencies. In fact, Lockheed Martin is the largest provider of IT services, systems integration, and training to the U.S. Government. The remaining portion of Lockheed Martin's business is comprised of international government and some commercial sales of our products, services and platforms. (source: company press release or website)

Buy-the-Dip trigger: $83.50

Half position or smaller!

BUY the 2011 January $90 calls (LMT 11A90.00)
-or-
BUY the 2012 January $90 calls (LMT 12A90.00)

Chart of LMT:


Whiting Petroleum - WLL - close: 86.98 change: +2.23

WLL is another candidate in the oil and energy sector. Shares have been consistently drifting higher for weeks. On a short-term basis the stock looks like a buy right now with a new 52-week closing high following three weeks of consolidating sideways. However, energy stocks look a little overbought here. We'll get a better price on our option if we wait for a dip. I am suggesting we use a trigger at $83.50 to initiate positions. If triggered we'll use a stop loss at $74.75. Our long-term target is $99.50. More aggressive traders could aim for the $109 area. Investors should note that WLL is due to report earnings on April 28th. Thus more cautious traders may want to wait until after we see the market reaction to earnings before launching positions even if WLL hits our trigger prior to the announcement.

FYI: I am suggesting if we do get triggered that readers only launch a half position (or smaller) since the market remains so overbought.

Company Info:
Whiting Petroleum Corporation, a Delaware corporation, is an independent oil and gas company that acquires, exploits, develops and explores for crude oil, natural gas and natural gas liquids primarily in the Permian Basin, Rocky Mountains, Mid-Continent, Gulf Coast and Michigan regions of the United States. (source: company press release or website)

Buy-the-Dip trigger: $83.50

Half positions or smaller!

BUY the 2011 January $90 calls (WLL 11A90.00)

Chart of WLL:


Active Watch List Candidates:

APA - Apache Corp. - close $109.87 change: +1.63

Oil stocks have continued to rally in spite of a rocky week for oil prices and a bearish oil inventory report on Wednesday. Shares of APA posted gains four days in a row and are now challenging resistance at the $110 level. Currently our plan is to buy call LEAPS on a breakout at $110.50. However, if we are triggered I am suggesting we use small positions (at least half your normal trade size if not smaller) given this more aggressive entry point. If triggered at $110.50 we'll use a stop loss at $102.45. Our first target is $124.75.

It is still unconfirmed but it looks like APA is due to report earnings on April 29th before the opening bell. Analysts expect a profit of $2.24 a share. Readers may want to wait until after the earnings to see how the market reacts to the news before initiating positions even if the stock hits our trigger in the meantime.

Breakout trigger: $110.50 (half position)

BUY the 2011 January $115 calls (APA 11A115.00)

Chart of APA:


CIRCOR Intl. - CIR - close: 36.02 change: +0.57

The rally in CIR continues with the stock up four points from its April lows. Shares closed at new 52-week highs on Friday and look overbought at current levels. We are bullish on CIR but we don't want to chase it. We were expecting CIR to report earnings this week but the company said they were going to announce on May 10th instead. A 20% drop seems like a lot but we would rather wait for CIR to correct back toward the $30.00 level. If shares happen to find support near $32.00 instead then we might reconsider bullish positions there. Right now our trigger to open positions is at $30.50. 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. 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: $42.52 change +0.96

The rally in CRS is just getting ridiculous. The stock surged from almost $36.00 at its lows on Monday to over $42.50 on Friday. The stock is up 63% from its February 2010 lows. Shares remain very overbought and they're just getting more overbought. The last correction from January to February was a 20% pull back. I am suggesting we raise our trigger to buy calls from $30.00 to $33.00. We'll raise our stop loss to $29.40. We'll raise our long-term target to $44.75. It could take weeks for CRS to pull back enough and hit our trigger.

Keep in mind that CRS is due to report earnings on April 27th before the opening bell. Analysts expect a profit of 11 cents. Don't be surprised if investors decide to sell the news and lock in profits after the report. Please note the new option listed (Decembers).

Buy-the-Dip trigger: $33.00

BUY the 2010 December $40 calls (CRS 10L40.00)

Chart of CRS:


Covance Inc. - CVD - close: 62.26 change: -0.15

I am temporarily dropping CVD as a watch list candidate. The overall posture is still bullish. The stock actually hit a new one-year high last week. I would rather wait for a correction and it may not stop at the 200-dma. Earnings are due out this week (April 28th). Let's see what happens after earnings. For today we're removing CVD as a candidate but I'm still watching it for support in the $56-55 zone.


DE - Deere & Co. - close: 61.79 change: +0.83

Shares of DE are still bouncing around the $59-62 zone. Traders bought the dip again on Monday and Thursday. Shares look tired so we'll wait for a pull back. Readers should be aware that rival Caterpillar (CAT) is due to report earnings on Monday (April 26) before the opening bell. CAT's results could have a significant influence on shares of DE this week.

Right now our plan is to buy call LEAPS on a dip to $52.50, which would be near the rising 200-dma. If triggered we'll use a stop loss at $47.90. Our first target is $69.75.

Buy-the-Dip trigger: $52.50

BUY the 2011 January $55 call (DE 11A55.00)
- or -
BUY the 2012 January $60 call (DE 12A60.00)

Chart of DE:


EMC Corp. - EMC - close: 19.98 change: +0.14

Not only did EMC beat earnings estimates but the company raised its 2010 guidance. Shares reacted with a rally to new 52-week highs. The stock is now testing potential round-number, psychological resistance at $20.00. I am suggesting we raise our trigger. The trend is up but EMC can still correct. We'll use a pull back to $18.25 as our entry point to buy call LEAPS. Our new stop loss is $16.40. Our long-term target is $22.50. (Readers may want to buy 2012 calls and aim higher)

Buy-the-Dip trigger: $18.25 *new*

BUY the 2011 January $20.00 LEAP CALL (EMC 11A17.50)
- or -
BUY the 2012 January $20.00 LEAP call (EMC 12A20.00)

Chart of EMC:


Imation Corp. - IMN - close: 12.32 change: +0.47

The rally continues in IMN with another new 52-week high. Shares are very overbought with the stock up nearly 45% from its February 2010 low near $8.50. We do not want to chase it and hope to see some profit taking once the company reports earnings. IMN is due to announce on April 27th before the opening bell. Wall Street expects a profit of 12 cents a share. After we see how investors react to the earnings news we'll reconsider adjusting our trigger to enter positions.

Currently I am suggesting we buy the stock (or calls) on a dip at $10.35. 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: $10.35

Buy the IMN stock at $10.35

-or-

BUY the 2010 October $12.50 call (IMN 10J12.50)

Chart of IMN:


Millicom Intl. - MICC - close: 92.96 change: +0.53

MICC delivered a bullish performance following its earnings report on April 20th. Shares soared to a new 52-week high around $94 and spent the rest of the week consolidating those gains. Aggressive traders may want to consider positions now. MICC certainly looks headed for the $100 level. I am suggesting readers wait. Broken resistance near $80.00 should offer some support. We'll raise our trigger to buy a pullback from $77.00 to $81.00. We'll move the stop loss to $74.75. 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: $12.00 change: -0.01

Hmm... after two weeks of bearish reversals traders decided to buy the dip in RT. The stock looks like it wants to rally again in spite of being so overbought. I still don't want to chase it here. The stock is up over 50% in just the last few months. Eventually RT will see a larger pull back. Right now I'm suggesting we use a trigger at $9.50 to open long-term bullish positions (I prefer the stock over the option). If triggered we'll use a stop at $8.45.

It could take a few weeks for RT to correct low enough to finally hit our entry point. 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: 58.15 change: +0.35

The rally in SAFM has stalled at the top of its bullish channel. Is this the beginning of the correction or just another pause on the way up. Shares look very overbought so we're waiting for an entry point on a correction back to $48.50. However, if we see shares find support closer to $50.00 we will probably re-adjust our entry point. If triggered our target is $59.75. I would aim higher but we only have a few months with the November calls.

Buy-the-Dip trigger: $48.50

BUY the 2010 NOV $55 calls (SAFM 10K55.00)

Chart of SAFM:


Trimble Navigation - TRMB - close: 31.01 change: +0.16

Technology stocks continue to rally and TRMB managed a new 52-week high near $31.60 last week. The stock remains very overbought. There is a chance TRMB could see some profit taking following its earnings report this week. The company announces on April 29th after the closing bell. Analysts expect a profit of 32 cents a share.

I am adjusting our entry point trigger to $26.75. 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.

Buy-the-Dip trigger: $26.75

BUY the 2010 November $30 calls (TRMB 10K30.00)

Chart of TRMB:


WLT - Walter Energy Inc. close: $95.96 change: +2.48

Traders bought the dip in WLT twice near the $90 level last week. Shares look poised to retest the $100 area soon. The stock remains overbought following the rally from its February lows. WLT is a momentum stock that tends to go to extremes. When the correction comes the stock will most likely over-correct, which is why our trigger is so low at $77.50. It's possible the profit taking could start following WLT's earnings report. The company is due to announce on April 28th after the closing bell. Wall Street wants to see a profit of 89 cents a share. Given the huge rally in this stock you could argue it's been price for perfection and investors could use any excuse to lock in gains.

Right now our plan is to open bullish positions at $77.50. If triggered our stop loss is $67.50 (under the 200-dma). Our first target is $99.50. Our second target is $110.
FYI: WLT can be a volatile stock. Readers may want to keep their position size small when initiating a position.

Buy-the-Dip trigger: $77.50

BUY the 2011 January $85 calls (WLT 11A85.00)
- or -
BUY the 2012 January $90 calls (WLT 12A90.00)

Chart of WLT: