New Watch List Entries
HSY - Hershey Co.
MCK - Mckesson Corp.
WYNN - Wynn Resorts Ltd.
Active Watch List Candidates
BA - Boeing Co.
CLF - Cliffs Natural Resources
COP - ConocoPhillips
CRM - Salesforce.com
CRS - Carpenter Technology
RT - Ruby Tuesday, Inc.
Dropped Watch List Entries
DE was removed from the watch list.
New Watch List Candidates:
Hershey Co. - HSY - close: 47.22 change: -0.34
Investors could turn more and more defensive as worries rise over the strength of the economic rebound both here and abroad. HSY could be a good candidate as a more defensive play. The rally has stalled near $48 and we want to be ready to buy calls on a correction. Prior resistance near $42 should offer some support. I am suggesting a trigger to buy call LEAPS a $42.50. If triggered we'll use a stop loss at $37.75. Our first target is $49.75. Our second, longer-term target is $57.00.
The Hershey Company (NYSE: HSY) is the largest producer of quality chocolate in North America and a global leader in chocolate and sugar confectionery. Headquartered in Hershey, Pa., The Hershey Company has operations throughout the world and more than 12,000 employees. With revenues of more than $5 billion, Hershey offers such iconic brands as Hersheyâ€™s, Reeseâ€™s, Hersheyâ€™s Kisses, Kit Kat, Twizzlers and Ice Breakers as well as the smooth, creamy indulgence of Hersheyâ€™s Bliss chocolates.
(source: company press release or website)
Buy-the-Dip trigger: $42.50
BUY the 2011 January $45.00 call (HSY 11A45.00)
- or -
BUY the 2012 January $50.00 call (HSY 12A50.00)
Chart of HSY:
Mckesson - MCK - close: 67.72 change: -1.27
MCK is a relative strength play. While the market ha been rolling over MCK has been consolidating sideways. During the "flash crash" traders bought the dip in MCK near its 100-dma. A few days ago the stock broke out to a new 52-week high after Goldman Sachs put MCK on their "conviction buy" list. Now shares are flirting with resistance near $70.00. If you're going to trade in the healthcare sector why not pick someone who supplies equipment to the rest of the industry? Supply management seems like a safe and growing business given the healthcare reform.
While I will keep my eye on MCK for a potential entry point near the 200-dma I actually expect shares to breakout higher. I'm suggesting a trigger to open bullish positions at $71.00. If triggered our target is $94.50. We'll use a stop loss at $62.99. Keep positions small. Buying breakouts in this environment is probably a higher-risk trade.
McKesson Corporation, currently ranked 14th on the FORTUNE 500, is a healthcare services and information technology company dedicated to helping its customers deliver high-quality healthcare by reducing costs, streamlining processes, and improving the quality and safety of patient care. Over the course of its 177-year history, McKesson has grown by providing pharmaceutical and medical-surgical supply management across the spectrum of care; healthcare information technology for hospitals, physicians, homecare and payors; hospital and retail pharmacy automation; and services for manufacturers and payors designed to improve outcomes for patients.
(source: company press release or website)
Breakout trigger: $71.00
BUY the 2011 January $75.00 call (MCK 11A75.00)
BUY the 2012 January $80.00 call (MCK 12A80.00)
Chart of MCK:
Wynn Resorts - WYNN - close: 82.21 change: -2.51
If the market is experiencing a correction and only a correction then we want to take advantage of this weakness. However, I suspect the correction is not over yet and a high-profile momentum name like WYNN could still see significant declines. The early May (flash crash) low for WYNN was $71.00. The $70 area and the rising 200-dma should offer some support. I am suggesting we use a trigger at $72.50 to open bullish positions. This is a volatile stock so we want to keep positions small. If triggered at $72.50 we'll use a stop loss at $64.00. Our long-term target is $99.00.
Note: Back in November 2009 WYNN declared a special cash dividend of $4.00 a share, that was payable in December 2009. They adjusted the option symbols to reflect this cash dividend. We want to use the normal call LEAPS with the VEG root symbol.
Wynn Resorts, Limited is traded on the Nasdaq Global Select Market under the ticker symbol WYNN and is part of the S&P 500 and NASDAQ-100 Indexes. Wynn Resorts owns and operates Wynn Las Vegas (www.wynnlasvegas.com), Encore (www.encorelasvegas.com) and Wynn Macau (www.wynnmacau.com). Wynn Las Vegas, a luxury hotel and destination casino resort located on the Las Vegas Strip features 2,716 luxurious guest rooms and suites, an approximately 111,000 square foot casino, 22 food and beverage outlets, an on-site 18-hole golf course, approximately 223,000 square feet of meeting space, an on-site Ferrari and Maserati dealership, and approximately 74,000 square feet of retail space. Wynn Macau is a destination casino resort in the Macau Special Administrative Region of the People's Republic of China and currently features 600 deluxe hotel rooms and suites, approximately 205,000 square foot casino, casual and fine dining in five restaurants, approximately 46,000 square feet of retail space, a health club, pool and spa, along with lounges and meeting facilities.(source: company press release or website)
Buy-the-Dip trigger: $72.50
BUY the 2011 January $80.00 calls (WYNN 11A80.00)
Use the call LEAPS with the VEG symbol: VEG1122A80
BUY the 2012 January $90.00 calls (WYNN 12A90.00)
Chart of WYNN:
Active Watch List Candidates:
Boeing Co. - BA - close: 69.82 change: -1.94
BA managed a gain for the week but shares produced a new lower high. Short-term traders may want to consider puts. Right now our plan hasn't changed. We want to buy call LEAPS on a dip near $60.00. I am suggesting a trigger to buy call LEAPS on a dip to $60.50. If triggered we will use a stop loss at $54.75. Our long-term target is $79.00. We want to keep positions sizes small to 1/2 or 1/4 your normal trade to limit our risk.
Buy-the-Dip trigger: $60.50 (small size 1/2 to 1/4 normal trade size)
BUY the 2011 January $70 call (BA 11A70.00)
Chart of BA:
Cliffs Natural Resources - CLF - close: 53.98 change: -2.32
Dollar strength continues to pressure commodity-related stocks. I suspect that support near $50.00 will break and CLF will test its 200-dma near $46.00. I'm moving our trigger to buy calls down to $46.50. If triggered we'll use a stop loss at $39.50. Our first target is $75.00.
FYI: Investors need to know that miners with operations in Australia present greater risk. Currently the Australian government is considering a 40% "resource super profit tax". If this measure gets passed then CLF could see a much larger decline. I would keep your position size small to limit your risk.
Buy-the-Dip trigger: $46.50
BUY the 2011 January $60 call (CLF 11A60.00)
- or -
BUY the 2012 January $70 call (CLF 12A70.00)
Chart of CLF:
ConocoPhillips - COP - close: 55.84 change: -1.10
The oil sector has been struggling thanks to plunging crude oil prices (on dollar strength/euro weakness). Believe it or not COP has weathered this weakness pretty well. I still think shares will correct toward their 200-dma but readers might want to consider upping their trigger to buy calls from $51 to $52. If triggered we'll use a stop loss at $46.00. Our first target is $69.00.
Buy-the-Dip trigger: $51.00
BUY the 2011 January $55 call (COP 11A55.00)
- or -
BUY the 2012 January $60 call (COP 12A60.00)
Chart of COP:
Salesforce.com - CRM - close: 84.72 change: -1.96
Wow! It was a very active week for CRM. The stock soared toward $90.00 only to roll over again near resistance. The relative strength is encouraging but we don't want to chase it. CRM might see some post-earnings profit taking. The company reports earnings on Thursday, May 20th after the closing bell. Wall Street is looking for a profit of 30 cents a share. I am suggesting we stick to the plan and wait for a dip to $70.50 to open bullish positions. More aggressive traders may want to consider jumping in early near $75.00.
If triggered our stop loss is $64.00. Our long-term target remains $99.00.
Buy-the-Dip trigger: $70.50
BUY the 2011 January $80 calls (CRM 11A80.00)
- or -
BUY the 2012 January $90 calls (CRM 12A90.00)
Chart of CRM:
Carpenter Technology - CRS - close: $39.14 change -2.03
CRS displayed relative strength midweek but the rally failed at its April highs. This now looks like a possible bearish double top pattern. I am still expecting a correction toward the $30 area. More aggressive traders might want to consider short-term puts with a stop above this recent high. We have a trigger to open bullish positions at $31.00. If triggered our stop is at $26.90. Our long-term target is $44.75. My time frame for CRS to hit our trigger is the next two or three weeks.
Buy-the-Dip trigger: $31.00
BUY the 2010 December $35 calls (CRS 10L35.00)
Chart of CRS:
DE - Deere & Co. - close: 58.36 change: -1.52
I am temporarily giving up on DE. Shares still offer potential near $52 and its 200-dma but I'd rather wait and see if this level holds. We are removing DE from the watch list for now.
Ruby Tuesday Inc. - RT - close: $11.50 change: -0.54
RT had a pretty big rally this past week but it failed near its mid April highs. We do not want to chase this stock. Wait for a correction back toward old resistance and what should be very significant support near $9.50-9.00.
October options are the longest ones available so I prefer buying the stock over an option. It could take another two or three weeks before RT finally hits our trigger. If triggered we'll use a stop at $8.45.
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: