The S&P 500 tested its 2010 lows this morning and bounced. Stocks had reached oversold levels again and this appears to be nothing more than a technical bounce. Granted it's a bounce that could last a few days. Let's see if the S&P 500 can rally back above its 200-dma and the 1100 level again. If not then we're probably looking at another leg down toward the 1000 area (or lower).
New Watch List Entries
None, no new watch list candidates tonight.
Active Watch List Candidates
BA - Boeing Co.
CRM - Salesforce.com
CRS - Carpenter Technology
HSY - Hershey Co.
RT - Ruby Tuesday, Inc.
WYNN - Wynn Resorts Ltd.
Dropped Watch List Entries
CLF, COP, and MCK all graduated to the play list.
Active Watch List Candidates:
Boeing Co. - BA - close: 62.78 change: -0.37
BA is still correcting. We have been looking for a dip toward $60 and shares hit $60.61 Tuesday morning when the market gapped open lower. More aggressive traders may want to consider buying calls on this bounce. I suspect that BA will actually hit $60.00 or its 200-dma (currently at $58.90) so I am moving our trigger to open bullish positions down to $60.00.
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: $60.00 (small size 1/2 to 1/4 normal trade size)
BUY the 2011 January $70 call (BA 11A70.00)
Chart of BA:
Salesforce.com - CRM - close: 82.13 change: -0.06
Shares of CRM are holding up very well, especially considering the news that management has lowered their earnings guidance for the next quarter. Normally lowered guidance would produce a much more bearish move in the stock price. While CRM is weathering the storm in the markets the short-term trend is still down with a failed rally near $85.00 on Monday. I expect CRM to drift toward $75.00 over the next few days and if the market really breaks down we'll be ready to buy the dip near $70.00.
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: $37.75 change +0.63
The last several days have been volatile for CRS with shares dipping toward $33.00 on Friday. Friday's move is actually a bullish reversal pattern but the bounce on Monday stalled near $39.00. The upgrades for AKS on Tuesday morning was bullish news for metal stocks and CRS managed to deliver a 1.6% gain on Tuesday. I still think shares will continue to correct lower. More conservative traders could look for a dip near $30.00 or the 200-dma. I am suggesting 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:
Hershey Co. - HSY - close: 46.07 change: -0.60
HSY is still holding up relatively well considering the market's volatility. Traders bought the dip near its 50-dma on Tuesday morning. I still expect a deeper correction to occur and it could take a few weeks before we get triggered. 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.
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:
Ruby Tuesday Inc. - RT - close: $10.48 change: -0.08
RT has moved from the $12-11 range to the $11-10 range. If shares break support at $10.00 should we expect the stock to trade into the $10-9 range? That's a distinct possibility so I'm moving our trigger to open bullish positions from $9.50 down to $9.25. More nimble traders could try and jump in near the $9.00 level. January 2011 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 $8.25. Our first long-term target is $12.00. Our longer-term target is $14.75.
Buy-the-Dip trigger: $9.25
BUY the stock at $9.25
- or -
BUY the 2011 January $10.00 calls (RT 11A10.00)
Chart of RT:
Wynn Resorts - WYNN - close: 79.57 change: +2.87
WYNN is seeing some strong intraday rebounds. That could be an indication of pent up buying interest. Last week on May 21st the stock slipped to $72.53. Not enough to open our trade, which has a trigger at $72.50. Thus far the bounces have stalled near the $80 level. I am not convinced the correction is over yet. We're moving our trigger down to $70.50 since WYNN may end up testing its 200-dma before all is said and done. If we are triggered at $70.50 we'll use a stop loss at $63.75. This is a volatile stock so we want to keep positions small. 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.
Buy-the-Dip trigger: $70.50 *new*
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: