New Watch List Entries
INFY - Infosys Technologies
MET - MetLife Inc.
Active Watch List Candidates
BVN - Compania de Minas Buenaventura
CRM - Salesforce.com
CRS - Carpenter Technology
GLD - SPDR Gold ETF
MCD - McDonald's Corp.
Dropped Watch List Entries
WYNN has graduated to the play list after hitting our trigger.
New Watch List Candidates:
Infosys Technologies - INFY - close: 62.32 change: +0.81
Investor fears of a double-dip recession here in the U.S. and Europe are growing. Thus tonight we're looking at a company based in India. India is seeing a widespread boom but it's constantly being overshadowed by the growth in China. This is not a pure play on India. Many of INFY's clients are western companies in the U.S. Yet in this environment, where cost-cutting reigns supreme, an outsourcing giant like INFY should hold up well.
INFY tagged a new high on Monday and retreated. I am suggesting we open very small positions on a dip to $59.00. If triggered we will use a stop loss at $54.90, just under the 200-dma. Our long-term target is $79.00, which happens to coincide with the Point & Figure chart that has an $81 target.
Infosys defines, designs and delivers IT-enabled business solutions that help Global 2000 companies win in a Flat World. These solutions focus on providing strategic differentiation and operational superiority to clients. With Infosys, clients are assured of a transparent business partner, world-class processes, speed of execution and the power to stretch their IT budget by leveraging the Global Delivery Model that Infosys pioneered. Infosys has over 113,000 employees in over 50 offices worldwide
(source: company press release or website)
Keep your positions small!
Buy-the-Dip trigger: $59.00
BUY the 2011 January $60.00 calls (INFY 11A60.00)
BUY the 2012 January $65.00 calls (INFY 12A65.00)
Chart of INFY:
MetLife Inc. - MET - close: 41.01 change: +1.61
The rebound in the insurance industry looks tempting. The sector did step backward this past week but the correction was not as bad as the rest of the market. The group actually looks poised to rally higher this week. I like MET as a bullish candidate. Barrons ran a nice article on MET describing how MET, the largest life insurer in the U.S. and Mexico, is poised to grow now that is has bought the Alico unit from AIG, which gives MET exposure to China and Brazil.
Technically MET still has a bullish trend of higher lows but on a short-term basis MET is facing resistance at $42.00 and its 50-dma closer to $42.50. I am suggesting we use a trigger at $42.75 as our entry point to buy call LEAPS. If triggered we'll use a stop loss at $36.40, which is just under the May low. There is some resistance near $48 and $50 but our long-term target is the $55-60 zone.
MetLife, Inc. is a leading provider of insurance, employee benefits and financial services with operations throughout the United States and the Latin America, Europe and Asia Pacific regions. Through its subsidiaries and affiliates, MetLife, Inc. reaches more than 70 million customers around the world and MetLife is the largest life insurer in the United States (based on life insurance in-force). The MetLife companies offer life insurance, annuities, auto and home insurance, retail banking and other financial services to individuals, as well as group insurance and retirement & savings products and services to corporations and other institutions
(source: company press release or website)
Keep your positions small. We can add to this trade as MET reaffirms the up trend.
Breakout trigger: $42.75
BUY the 2011 January $45 call (MET 11A45.00)
- or -
BUY the 2012 January $50 call (MET 12A50.00)
Chart of MET:
Active Watch List Candidates:
Compania de Minas Buenaventura - BVN - close: 40.41 change: +1.26
Mining stock BVN surged to a new six-month high on Friday as gold prices rally back toward their recent (and record) highs. The trend for BVN is up but volume has been very light the past week. We do not want to chase the stock here. Gold miners can be a volatile group and it will see another pull back. Of course that doesn't mean BVN won't hit $42 first before consolidating. Right now we'll keep our trigger to open bullish positions at $35.15. More aggressive traders may want to eye another bounce from $38.00 instead.
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: 91.62 change: +0.58
CRM has been in the headlines as the legal battle with Microsoft (MSFT) heats up. The two companies are arguing over patent infringement violations and stolen intellectual property. At the moment I don't see it having an affect on CRM's share price. We've been expecting a correction and CRM dipped toward short-term support near $90.00. The fact that not one but two analyst firms raised their price targets on CRM last week did not stop shares from participating in the market's decline. One firm upped their price target to $110, another to $115.
I'm hoping the correction continues. Our plan is to launch bullish positions no a dip near $80. Officially our 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: $36.28 change +0.62
Volume has been falling as CRS followed the market lower. That's a good sign. I suspect CRS is poised to bounce and I was tempted to make it a new play tonight. However, the market's short-term trend is still down and until proven otherwise we're better off waiting for CRS to dip toward its June lows. We will keep the trigger at $34.00. More conservative traders could still hold out hope for a dip nearer to the 200-dma. If we are triggered at $34.00 we'll use a stop loss at $29.40. I would initiate small positions only. We can add to positions as CRS confirms the trend. Our long-term target is $44.75.
Buy-the-Dip trigger: $34.00
BUY the 2010 December $35 calls (CRS 10L35.00)
Chart of CRS:
SPDR Gold ETF - GLD - close: 122.76 change: +1.46
Money continues to pour into gold and the precious metal has bounced back toward its all-time highs after testing its 12-week trendline of higher lows. There are plenty of pundits suggesting this is a bubble and just as many crying that gold will rally for years to come. Given the troubles in Europe and our own debt burden here in the U.S. the demand for gold might be strong for a long time.
We don't want to chase the GLD here near its highs. I am actually adjusting our trigger point lower. It looks like the GLD is coiling for a breakout. Now it could be for a breakout higher but it also looks like a subtle bear-wedge pattern. I suspect the GLD will breakdown, retest its long-term trendline of support, and then rally again. Our new entry point to buy call LEAPS on the GLD is $115.00. We'll adjust the stop loss to $108.45.
Our target is $140.
Buy-the-Dip trigger: $115.00
BUY the 2010 March $120 call (GLD 11C120.00)
- or -
BUY the 2012 Jan. $130 call (GLD 12A130.00)
Chart of GLD:
Weekly Chart of GLD:
McDonald's Corp. - MCD - close: 67.42 change: -0.31
A four-day decline in the stock market turned into a five-day loss for shares of MCD. The bounce has rolled over and MCD just formed a new lower high. We need to be defensive with any bullish positions. MCD should still have support near $66.00 and the $65.00 levels but keep your positions small. MCD paused at its 100-dma on Friday and you could argue MCD is very short-term oversold. I suggest we stick to our plan and wait for a dip toward $66. Officially our entry point to buy calls is at $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: