New Watch List Entries
GLD - SPDR Gold ETF
RIG - Transocean Ltd.
UNG - United States Natural Gas (ETF
Active Watch List Candidates
BA - Boeing Co.
CRM - Salesforce.com
CRS - Carpenter Technology
HSY - Hershey Co.
RT - Ruby Tuesday, Inc.
WYNN - Wynn Resorts Ltd.
New Watch List Candidates:
SPDR Gold ETF - GLD - close: 119.19 change: +1.23
Right now investors are scared. They are scared that China will slow down their economy too much. They are scared that Europe and the EU will not be able to solve their sovereign debt challenges and they're scared that Europe will see a banking crisis similar to our own back in 2008. Investors are also scared that the U.S. economy could be slowing down.
What do investors do when they're scared? More and more of them are buying gold. That should be good news for bulls in the GLD.
I am tempted to buy options on the GLD right now but I suspect we'll get a better price if we wait. I'm suggesting a trigger to open positions at $115.00. More nimble traders could try and launch positions in the $112-110 zone. If triggered I'm suggesting a stop loss at $107.75, which is under the 200-dma.
The GLD is an exchange traded fund (ETF) that seeks to mimic the price of gold bullion.
Buy-the-Dip trigger: $115.00
BUY the 2010 March $120 call (GLD 11C120.00)
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BUY the 2012 Jan. $130 call (GLD 12A130.00)
Chart of GLD:
Transocean Ltd. - RIG - close: 50.20 change: -0.91
RIG has gotten lots of unwelcome press in the last 40+ days as the market reacts to the worst oil spill in U.S. history. RIG owned the deepwater oil rig that blew up and created the oil spill in the gulf but they were not operating it. BP was the operator. While RIG may have some responsibility to the spill I doubt it justifies the stock falling from $90 to $50 in six weeks. This move appears to be overdone but I don't think it's over yet. The late December 2008 low for RIG was $41.95. That's probably acting like a magnet for the bears.
I am suggesting we use a trigger to buy long-term calls on RIG if shares hit $43.50. We'll try and limit our risk with a stop loss at $38.45. I do consider this an aggressive play since we really don't know yet how much RIG might be liable for in clean up costs and risks associated with the spill and oil rig explosion. If triggered our long-term targets are $59 and $75.
Transocean, the worldâ€™s largest offshore drilling contractor, provides the most versatile fleet of mobile offshore drilling units to help clients find and develop oil and natural gas reserves. Building on more than 50 years of experience with the highest specification rigs, our 18,000 employees are focused on safety and premier offshore drilling performance.
(source: company press release or website)
Buy-the-Dip trigger: $43.50
BUY the 2011 January $50 call (RIG 11A50.00)
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BUY the 2012 January $60 call (RIG 12A60.00)
Chart of RIG:
U.S. Natural Gas ETF - UNG - close: 8.18 change: +0.17
After two and a half long years of steady declines it looks like the UNG natural gas ETF has FINALLY found a bottom. More and more nat-gas is being talked about as a replacement for dirty coal plants in the U.S. The futures price of natural gas has fallen so low that producers are prepared to cut back production. Why sell a commodity for a loss when you can just dial back production? If you have a long-term outlook the current glut of natural gas is temporary.
Technically the UNG has been building a base for more than two months. The recent breakout higher looks bullish. I suspect UNG will dip and retest the recent highs as support. That's why I'm suggesting a trigger to buy calls at $7.80. If triggered we'll use a stop loss at $6.70. That's a relatively wide (aggressive) stop but we want to give this ETF room to move. Our long-term targets are $11.00 and $14.00. Just because the options look "cheap" don't buy too many. Be disciplined with your position size. You can add to positions later once UNG confirms the trend change.
The United States Natural Gas Fund, LP ("UNG") is a new way for investors and hedgers to manage their exposure to energy. The United States Natural Gas Fund LP (UNG) is an exchange traded security that is designed to track in percentage terms the movements of natural gas prices. UNG issues units that may be purchased and sold on the NYSE Arca. The investment objective of UNG is for the changes in percentage terms of the units' net asset value to reflect the changes in percentage terms of the price of natural gas delivered at the Henry Hub, Louisiana, as measured by the changes in the price of the futures contract on natural gas traded on the New York Mercantile Exchange that is the near month contract to expire, except when the near month contract is within two weeks of expiration, in which case it will be measured by the futures contract that is the next month contract to expire, less UNG's expenses. (source: company press release or website)
Buy-the-Dip trigger: $7.80
BUY the 2011 Jan. $8.00 call (UNG 11A8.00)
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BUY the 2012 Jan. $10.00 call (UNG 12A10.00)
Chart of UNG:
Active Watch List Candidates:
Boeing Co. - BA - close: 61.15 change: -3.16
I am growing more and more concerned about this market. We could see another leg down. I'm taking a more cautious approach to new entries and that means we're adjusting the trigger for BA. Shares are already close to potential support near $60.00 and the 200-dma but if you look on the weekly chart the $55.00 level should also be support and it wouldn't surprise me to see BA trading near $55 in a couple of weeks.
I am moving our trigger to open positions down to $55.50 and our stop to $49.40. You don't have to buy the dip. Instead you could wait to buy a bounce from $55.00. Our long-term target is $79.00.
Buy-the-Dip trigger: $55.50 (small size 1/2 to 1/4 normal trade size)
BUY the 2011 January $60 call (BA 11A60.00)
Chart of BA:
Salesforce.com - CRM - close: 89.64 change: -5.56
CRM broke out past major resistance near $90.00 on Thursday. I didn't see any specific news. The stock does have about 10% short interest so odds are good most of Thursday's rally was short covering. Unfortunately for the bulls the stock was hammered lower on Friday. Shares have been very volatile with a move from $75 to $95 in about two weeks. We don't want to chase CRM here. I would consider raising our trigger toward the $75 area. Our entry point could be a few weeks away. For now our suggested trigger remains $70.50.
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)
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BUY the 2012 January $90 calls (CRM 12A90.00)
Chart of CRM:
Carpenter Technology - CRS - close: $35.32 change -2.50
The bounce in CRS is rolling over and shares appear to be building a bull-flag pattern. I'm betting CRS will see a correction toward the $30 level and its 200-dma. We want to use a dip to $31.00 as our entry point.
If triggered our stop is at $26.90. Our long-term target is $44.75. Maybe by the time CRS finally hits our trigger the January calls will become available.
Buy-the-Dip trigger: $31.00
BUY the 2010 December $35 calls (CRS 10L35.00)
Chart of CRS:
Hershey Co. - HSY - close: 48.29 change: -1.12
HSY has been showing relative strength. The markets were encouraged that HSY's employees voted in favor of a labor deal that would set the stage for a $200 million expansion that would eventually see the number of employees double. Shares of HSY rallied to new relative highs and broke out from its six-week trading range. I had been expecting a correction toward prior resistance near $42.00 but we may need to readjust our entry point strategy. I'm starting to think a dip near $44 or $46 might be a potential entry point. However, at this moment, given the market's weakness, I'm leaving our trigger at $42.50 for now. 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)
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BUY the 2012 January $50.00 call (HSY 12A50.00)
Chart of HSY:
Ruby Tuesday Inc. - RT - close: $10.07 change: -0.57
There is no change from my prior comments on RT. The stock looks poised to break support near $10.00. If it does break it should be a quick drop toward the $9.00 level. I'm actually adjusting our entry point to $9.05.
January 2011 options are the longest ones available so I prefer buying the stock over an option. 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: $9.05
BUY the stock at $9.05
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BUY the 2011 January $10.00 calls (RT 11A10.00)
Chart of RT:
Wynn Resorts - WYNN - close: 79.81 change: -4.35
The oversold bounce has stalled near resistance around the $85.00 area. As the market slides lower I'm expecting it to pull shares of WYNN toward $70.00 and its 200-dma. I do consider this an aggressive play. The jobs data was bearish for the economy and consumers will remain cautious. On top of that WYNN is a volatile stock. Keep your position size very small. If trigger we'll use a stop loss at $63.75.
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
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: