I'm not adding any new watch list candidates tonight. I was tempted to add LLL as a candidate and watch it for a breakout over the $85.00 level. However, the scandal involving an L3 unit eavesdropping on Airforce emails and the expectation for budget cuts by the Pentagon soured me on the idea. Stocks are kind of in no-man's land right now anyway. Let's see if the market can produce any follow through with the current bounce.
New Watch List Entries
Active Watch List Candidates
BVN - Compania de Minas Buenaventura
CRM - Salesforce.com
CRS - Carpenter Technology
GLD - SPDR Gold ETF
MCD - McDonald's Corp.
WYNN - Wynn Resorts Ltd.
Dropped Watch List Entries
None. No watch list candidates were dropped.
Active Watch List Candidates:
Compania de Minas Buenaventura - BVN - close: 39.49 change: +0.23
Mining stocks continue to rally thanks to strength in gold. Investors have ignored the recent dip in copper prices. There is also talk that gold could be near a top but the precious metal just broke out to a new high on Friday. On a short-term basis BVN looks overbought with a four-week rally in place. I am suggesting we wait for a pull back.
The $35.00 level should be short-term support. Let's use a trigger at $35.15 to open bullish positions. Unfortunately we don't have any LEAPS so the longest-dated options available are December 2010 calls. If triggered we'll use a stop loss at $29.90. Our first target is $42.25. Our second, more aggressive target is $47.50.
Buy-the-Dip trigger: $35.15
BUY the 2010 December $40 calls (BVN1018L40)
Chart of BVN:
Salesforce.com - CRM - close: 95.72 change: -1.38
CRM closed the week near its all-time highs but some of the technical oscillators are suggesting the rally is running out of gas. We do not want to chase this stock here. CRM should have support near $90 and near $80. We want to wait for a dip toward $80. Our suggested entry point is $81.00.
If triggered our stop loss is $74.00. Our new long-term target is $119.00.
Buy-the-Dip trigger: $81.00
BUY the 2011 January $85 calls (CRM 11A85.00)
- or -
BUY the 2012 January $90 calls (CRM 12A90.00)
Chart of CRM:
Carpenter Technology - CRS - close: $38.99 change +2.26
I am suggesting we adjust our trigger on CRS and raise it from $33.00 to $34.00. The recent lows were $33.53 on June 8th and $33.02 on May 21st. If we're lucky CRS will retest the $34.00 level again before launching into its next leg higher. Previously I suggested that more aggressive traders consider bullish positions on a close over $40.00.
If triggered our stop loss is $29.40. 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: $34.00
BUY the 2010 December $35 calls (CRS 10L35.00)
Chart of CRS:
SPDR Gold ETF - GLD - close: 122.83 change: +0.93
The rally in gold continues. The precious metal hit a new all-time high of $1,263.70 an ounce on Friday with a +2.3% gain for the week. Gold is on track for its third monthly gain in a row. The GLD gold ETF hit $123.50 intraday.
With gold at a new high there is talk of a bubble in this commodity. Others argue that investors are seeking a safe haven. No one believes the troubles in Europe have been solved and there is growing doubt about the economic recovery in the U.S. especially with stubbornly high unemployment.
I don't want to chase gold here even though it has broken out above resistance. Let's wait for a dip toward the 50-dma. I'll raise our entry point to $117.50 and our stop loss to $109.50. Our target is $140.
Buy-the-Dip trigger: $117.50
BUY the 2010 March $120 call (GLD 11C120.00)
- or -
BUY the 2012 Jan. $130 call (GLD 12A130.00)
Chart of GLD:
McDonald's Corp. - MCD - close: 69.88 change: -0.17
There is no change from my prior comments on MCD. The stock spent the week in a narrow range. I'm still expecting a dip before MCD moves much higher.
Use a pull back into the $66-65 zone as a bullish entry point. Our official trigger is $66.50. We will use a stop loss at $63.25, just under the 200-dma. Our long-term target is $79.75.
Buy-the-Dip trigger: $66.50
BUY the 2011 January $70 calls (MCD1122A70)
- or -
BUY the 2012 January $80 calls (MCD1221A80)
Chart of MCD:
Wynn Resorts - WYNN - close: 85.03 change: -0.52
WYNN hit $86.85 on June 16th - not enough to trigger out play. The larger trend for WYNN is still up but we want to wait for the right entry point. I would prefer to buy call LEAPS on a dip at $76 near the 100-dma. However, WYNN could easily run away from us if investor sentiment improves. That's why we have a higher-risk entry point at $87.75. Of course WYNN is a volatile stock and all positions here should be considered aggressive. Keep your position size small to limit your risk.
If triggered at $76.00 we'll use a stop loss at $69.75. If triggered at $87.75 our stop will be $79.45. Our long-term target is $112.50.
Buy-the-Dip trigger: $76.00 or Break-out trigger: $87.75
BUY the 2011 January $90.00 calls (WYNN 11A90.00)
BUY the 2012 January $100.00 calls (WYNN 12A100.00)
Chart of WYNN: