I am expecting the market to see a correction in mid October and then begin its next leg higher into a decent fourth-quarter rally. With this sort of outlook we need to be searching for bullish candidates to buy the dip. In addition to today's new candidates I'm listing a few more stocks that caught my eye.
CI is facing resistance near $36. A breakout would be bullish but we may want to focus on a dip toward the 200-dma near $34.
LTM is trading near significant resistance at $40.00. After months of consolidation a breakout here could herald a new multi-month leg higher.
NEU has broken out from its consolidation but the rally stalled at resistance near $110. I would watch for a retest of support near $110 or better yet $105 as a potential entry point.
WLP is a healthcare stock that has broken out from a multi-month consolidation. Shares have also created an inverse H&S pattern. A close over resistance near $57.50 might be a bullish entry point.
New Watch List Entries
AKAM - Akamai Technology
CERN - Cerner Corp
NOK - Nokia Corp
Active Watch List Candidates
BRK.B - Berkshire Hathaway
BVN - Compania de Minas Buenaventura
DE - Deere & Co
HD - Home Depot
NKE - Nike Inc.
SRCL = Stericycle Inc.
VMED - Virgin Media
WYNN - Wynn Resorts Ltd.
Dropped Watch List Entries
IBM and LMT graduated to the play list.
New Watch List Candidates:
Akamai Technology - AKAM - close: 49.33 change: -0.85
Back in July AKAM reported earnings that were in-line with estimates. The company's lackluster guidance was a disappointment and the stock plunged. Yet just a couple of days later traders were buying the dip and AKAM saw a six-week rally to new highs. Longer-term the trend is up and the consolidation in June and July looks like a bull-flag pattern. Short-term the stock is rolling over into a much needed correction. I'm expecting a pull back toward support in the $46-45 zone.
I am suggesting we launch bullish positions on a dip to $45.50. If triggered we'll use a relatively tight stop loss at $41.90. Our first target is $54.75. Our second, longer-term target is $59.75. FYI: AKAM has seen some takeover chatter in the last couple of months. Investors should note that AKAM is due to report earnings on Oct. 27th. I prefer the 2012 calls.
AkamaiÂ® provides market-leading, cloud-based services for optimizing Web and mobile content and applications, online HD video, and secure e-commerce. Combining highly-distributed, energy-efficient computing with intelligent software, Akamai's global platform is transforming the cloud into a more viable place to inform, entertain, advertise, transact and collaborate. (source: company press release or website)
Buy-the-Dip trigger: $45.50
BUY the 2011 January $50 calls (AKAM1122A50)
- or -
BUY the 2012 January $50 calls (AKAM1221A50)
Chart of AKAM:
Cerner Corp. - CERN - close: 85.03 change: +1.04
It looks like attitudes on CERN have changed recently. The stock spent the entire summer consolidating lower after hitting a new all-time high of $92.95 back on April 26th, 2010. Investors started buying the dips near $70.00 and now CERN has a bullish double bottom at that level. In the last several weeks CERN has broken out from its bearish trend of lower highs and begun to breakout past several layers of resistance.
While the impact of the new healthcare reform is still unclear it stands to reason that a company like CERN, a healthcare information systems company, could be a winner as the industry tries grow more efficient. Currently the Point & Figure chart is forecasting a 110 price target.
I am suggesting we use a pull back to 81.50 as our entry point to launch bullish LEAPS positions. If triggered we'll use a stop loss at $77.75. Our first long-term target is $89.50. FYI: CERN is due to report earnings on Oct. 27th (unconfirmed).
Cerner is transforming healthcare by eliminating error, variance and waste for healthcare providers and consumers around the world. Cerner(R) solutions optimize processes for healthcare organizations ranging in size from single-doctor practices, to health systems, to entire countries, for the pharmaceutical and medical device industries, employer health and wellness services industry and for the healthcare commerce system. These solutions are licensed by more than 8,500 facilities around the world, including approximately 2,300 hospitals; 3,400 physician practices covering more than 30,000 physicians; 600 ambulatory facilities, such as laboratories, ambulatory centers, cardiac facilities, radiology clinics and surgery centers; 700 home-health facilities; and 1,500 retail pharmacies.
(source: company press release or website)
Buy-the-Dip trigger: $81.50
BUY the 2011 January $85 calls (CERN1122A85)
- or -
BUY the 2012 January $90 calls (CERN1221A90)
Chart of CERN:
Nokia Corp. - NOK - close: 10.31 change: +0.28
It's been an ugly couple of years for Nokia. The stock was trading near $40 back in late 2007. NOK spent much of 2009 in a wide trading range. Then shares collapsed last spring with a plunge toward $8 a share. NOK is a huge player in the mobile phone market but Wall Street feels that the company has lost the smartphone battle to Apple's iPhone and Google's Android phones.
I suspect that all the bad news for NOK has been priced into the stock. The company is making a comeback and trying to compete with AAPL's iPhone and iTunes store. NOK just announced that out of their 140 million users worldwide they have 200,000 people a day signing up for their Ovi Store, where consumers can download apps, games, and music. Currently the Ovi store is seeing more than two million downloads a day. Again, this doesn't compete with Apple but it's a move in the right direction and shares of NOK seem to have bottomed.
On a short-term basis NOK is trading in a $9.70-10.30 range. While we could go ahead and launch positions now we will probably get a better entry point on a market pull back soon. I am suggesting a trigger to launch bullish LEAPS positions on a dip to 9.85. If triggered we'll use a stop loss at $9.45.
Our first long-term target is $11.85.
At Nokia, we are committed to connecting people. We combine advanced technology with personalized services that enable people to stay close to what matters to them. Every day, more than 1.3 billion people connect to one another with a Nokia device - from mobile phones to advanced smartphones and high-performance mobile computers. Today, Nokia is integrating its devices with innovative services through Ovi (http://www.ovi.com), including music, maps, apps, email and more. Nokia's NAVTEQ is a leader in comprehensive digital mapping and navigation services, while Nokia Siemens Networks provides equipment, services and solutions for communications networks globally
(source: company press release or website)
Buy-the-Dip trigger: $9.85
I prefer the 2012 calls over 2011 calls.
BUY the 2011 January $10.00 calls (NOK1122A10)
- or -
BUY the 2012 January $10.00 calls (NOK1221A10)
Chart of NOK:
Active Watch List Candidates:
Berkshire Hathaway - BRK.B - close: 82.71 change: +0.03
Aside from some volatility on the 23rd and 24th shares of BRK.B have been consolidating sideways for three weeks. I don't see any changes from my prior comments. We're long-term bullish on this stock and hoping for a pull back to buy call LEAPS on the dip. More aggressive traders may want to consider an alternative strategy to buy calls on a breakout over $84-85 in case BRK.B does not see a dip.
The plan is to buy calls on a dip at $80.50. If triggered at $80.50 I'm suggesting a stop loss at $74.95. Our long-term target is $92.50 and $99.00. I prefer the 2012 calls.
Buy-the-Dip trigger: $80.50
BUY the 2011 Jan. $85 calls (BRKB1122A85)
- or -
BUY the 2012 Jan $90 calls (BRKB1221A90)
Chart of BRK.B:
Compania de Minas Buenaventura - BVN - close: 46.53 change: +1.35
BVN is a Peruvian miner of gold and silver and given the new highs in gold and silver prices it's not a surprise to see BVN breaking out. Unfortunately, BVN is breaking higher without us! The stock added about five points last week. Both gold and silver have been surging on weakness in the dollar, which could be nearing some support. Thus the miners, like BVN, could correct when the dollar bounces and gold corrects. Broken resistance in BVN near $42.00 should now be new support. I am upgrading our trigger to buy calls from $38.50 to $42.50. We'll move our stop loss to $39.40. Our first long-term target is $49.50.
Buy-the-Dip trigger: $42.50
BUY the 2011 March $50 calls (BVN1119C50) *updated*
Chart of BVN:
Deere & Co - DE - close: 68.57 change: -1.21
Uh-oh! We need to be careful about our strategy in DE. We have been expecting a pull back but the stock has created a dangerous three-candle bearish reversal on its weekly chart (see below). I am moving our trigger to buy the dip down to $62.00 and we're adjusting our stop loss to $59.00. If you bought the dip at $68.50 I would consider exiting early and waiting for a better entry point. I prefer the 2012 LEAPS over the 2011 options.
Buy-the-Dip trigger: $62.00 (updated)
BUY the 2011 March $70.00 calls (DE1119C70)
- or -
BUY the 2012 January $70.00 calls (DE1221A70)
Chart of DE:
Home Depot - HD - close: 31.82 change: +0.14
HD spent most of the week trading sideways under resistance near $32.00. I don't see any changes from my prior comments. We're waiting for a pull back. The plan is to buy call LEAPS on a dip at $30.00. More conservative traders could look for a dip near the 50-dma instead. If triggered our stop is $27.90. Our long-term target is $33.90 and $36.00. We can expect to find resistance near $32.00. I prefer the 2012 calls over the 2011 calls.
Buy-the-Dip trigger: $30.00
BUY the 2011 Jan $30.00 calls (HD1122A30)
BUY the 2012 Jan $30.00 calls (HD1221A30)
Chart of HD:
Nike Inc. - NKE - close: 80.25 change: +0.11
NKE has held up pretty well considering the rest of the market is moving sideways. Traders resisted the urge to lock in gains and do some profit taking but I doubt they will be able to resist much longer, especially if the market finally sees a correction. There is no change from my prior comments. We want to use a dip at $75.25 as an entry point to buy call LEAPS.
If triggered we'll use a stop loss at $69.45. Our long-term target is $98.00. I prefer the 2012 calls but more aggressive traders may want to use the 2011 calls and just exit early near $89 instead.
Buy-the-Dip trigger: $75.25
BUY the 2011 Jan $80 calls (NKE1122A80)
- or -
BUY the 2012 Jan $90 calls (NKE1221A90)
Chart of NKE:
Stericycle - SRCL - close: 70.73 change: +1.25
SRCL continues to show relative strength and shares hit another new all-time high on Friday. We still don't want to chase it. I'm suggesting a dip to $66.00. More aggressive traders could jump in early at $67.00. FYI: If triggered we will use a stop loss at $62.75.
Investors appear to be interested in medical waste disposal if shares of SRCL are any indication. After more than two months of consolidating near the $65 area it looks like SRCL is poised to move. We do not want to chase it here. Look for a dip back toward $66.00. If triggered our long-term target is $79.00.
Buy-the-Dip trigger: $66.00
BUY the 2011 May $70 calls (SRCL1119E70) *updated to May*
Chart of SRCL:
Virgin Media - VMED - close: 23.35 change: +0.29
Shares of VMED have broken out to another wave of new 52-week highs. I still don't want to chase it. We will upgrade our trigger to buy calls at $21.00 and we'll raise our stop loss to $19.29.
Our first long-term target is $24.90. I prefer the 2012 LEAPS over the 2011s.
FYI: Keep your position size small! This is a higher-risk trade.
Buy-the-Dip trigger: $21.00 *updated*
BUY the 2011 Jan $22.50 call (VMED1122A22.5) *updated*
BUY the 2012 Jan $25.00 call (VMED1221A25)
Chart of VMED:
Wynn Resorts - WYNN - close: 87.09 change: +0.32
Thanks to the super strong Chinese economy shares of WYNN are more a play on Macau than on Vegas. Overall not much has changed in a week. The stock has been consolidating sideways near support at $86.00. Optimistically the stock would rally from here but I'm expecting a market pull back so we'll look for the next level of support in WYNN. I'm inching our trigger down to $81.00 and our stop loss, if triggered, to $76.75 (under the 200-dma).
Our first target to take profits is $99.00. Longer-term we'll consider a target at $109. I prefer the 2012 calls over the 2011s but if you're just aiming for $99 the 2011s can work. Remember, small positions to limit your risk. This is an aggressive trade.
Buy-the-Dip trigger: $81.00
BUY the 2011 Jan $90 calls (WYNN1122A90)
- or -
BUY the 2012 Jan $100 calls (WYNN1221A100)
Chart of WYNN: