New Watch List Entries
DO - Diamond Offshore
ESRX - Express Scripts
Active Watch List Candidates
BRK.B - Berkshire Hathaway
BVN - Compania de Minas Buenaventura
CERN - Cerner Corp
DE - Deere & Co
F - Ford Motor Co.
HD - Home Depot
NKE - Nike Inc.
NOK - Nokia Corp
SRCL = Stericycle Inc.
WLL - Whiting Petroleum
WYNN - Wynn Resorts Ltd.
Dropped Watch List Entries
WLP has graduated to the play list.
New Watch List Candidates:
Diamond Offshore - DO - $71.65 change: -0.06
Energy and oil service stocks have continued to rally even though oil's upward momentum has stalled in the last couple of weeks. Drilling have been showing relative strength now that the offshore drilling moratorium is officially gone. There are plenty in the industry that claim the new rules are onerous and leave a de factor moratorium still in place. Still it's not having much impact on the stock price. Shares of DO appear to have found a new bottom in the $57.50-67.50 zone.
The recent breakout looks like an entry point but we don't want to chase it with the market so overbought. I am suggesting we wait for a pull back and use a trigger at $67.50 to launch positions. If triggered we'll use a stop loss at $62.40 (under the 50-dma). Our long-term targets are $79.00 and $89.00. FYI: DO is due to report earnings on Oct. 21st.
Diamond Offshore provides contract drilling services to the energy industry around the globe and is a leader in deepwater drilling.
(source: company press release or website)
Buy-the-Dip trigger: $67.50
BUY the 2011 March 80.00 calls (DO1119C80)
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BUY the 2012 January 86.00 calls (DO1221A86)
Chart of DO:
Express Scipts - ESRX - close: 48.37 change: +096
As Americans adjust to the new healthcare reforms Wall Street should grow more comfortable too and the up trend in ESRX is likely to continue. Honestly, I was tempted to buy call LEAPS on ESRX tonight. However, the market remains overbought and there is a good chance this stock could retest its 50-dma.
I am suggesting a trigger to buy calls at $47.00. If triggered we'll use a stop loss at $44.75 (under the long-term trendline). Our first target is $53.75. I'm tentatively putting our second, longer-term target at $59.00. FYI: ESRX is due to report earnings on Oct. 27th.
Express Scripts, Inc., one of the largest pharmacy benefit management companies in North America, is leading the way toward creating better health and value for patients through ConsumerologyÂ®, the advanced application of the behavioral sciences to healthcare. This approach is helping millions of members realize greater healthcare outcomes and lowering cost by assisting in influencing their behavior. Headquartered in St. Louis, Express Scripts provides integrated PBM services including network-pharmacy claims processing, home delivery services, specialty benefit management, benefit-design consultation, drug-utilization review, formulary management, and medical and drug data analysis services. The company also distributes a full range of biopharmaceutical products and provides extensive cost-management and patient-care services. (source: company press release or website)
Buy-the-Dip trigger: $47.00
I'm suggesting the 2012 and 2013 calls.
BUY the 2012 January $55 calls (ESRX1221A55)
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BUY the 2013 January $55 calls (ESRX1319A55)
Chart of ESRX:
Active Watch List Candidates:
Berkshire Hathaway - BRK.B - close: 83.37 change: -0.24
BRK.B managed to eke out another gain for the week but shares are still struggling with resistance near $84.00. There were a couple of brief rallies over this level of resistance on Thursday and Friday but shares failed to close above it. I am still willing to buy call LEAPS on a pull back toward its simple 200-dma (currently nearing $78) and I've listed a trigger at $79.00 to launch positions with a suggested stop loss at $74.40. However, I think odds are favoring a bullish breakout higher. Let's move the breakout trigger from $84.25 to $84.50 and we will wait for BRK.B to actually close over $84.50 then launch positions the next morning with a trigger at $79.40.
My long-term target is $99.00. I prefer the 2012 calls.
Buy-the-Dip trigger: $79.00 or buy when BRK.B closes over $84.50.
On a dip - BUY the 2011 Jan. $85 calls (BRKB1122A85)
- or -
On a breakout - BUY the 2012 Jan $90 calls (BRKB1221A90)
Chart of BRK.B:
Compania de Minas Buenaventura - BVN - close: 48.99 change: +0.67
Ouch! Another week has gone by and BVN continues to rally higher without us. The stock is up about +20% in the last three weeks so we don't want to chase it now. I don't see any changes from my prior comments. We will look to buy calls on a dip to $44.00 with a stop loss at $39.90 and I'm suggesting we only buy half our normal position since this is turning into a more aggressive trade. FYI: I can't find an earnings date for this Peruvian miner.
Buy-the-Dip trigger: $44.00 (half a position)
BUY the 2011 March $50 calls (BVN1119C50)
Chart of BVN:
Cerner Corp. - CERN - close: 86.49 change: -0.79
Shares of this medical technology company hit new five-month highs this past week near $88. Yet after breaking out from a two-week consolidation pattern the stock produced a bearish reversal pattern on Friday. I still don't want to chase CERN at these levels and suspect it might see a pullback following its earnings report. CERN is due to report earnings on Oct. 28th. The street is looking for a profit of 74 cents a share.
I am suggesting we launch bullish positions on a dip to $82.00.
If triggered we'll use a stop loss at $77.75. Our first long-term target is $89.50. I prefer the 2012 calls.
Buy-the-Dip trigger: $82.00
BUY the 2011 January $85 calls (CERN1122A85)
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BUY the 2012 January $90 calls (CERN1221A90)
Chart of CERN:
Deere & Co - DE - close: 75.31 change: -0.04
Shares of DE continue to look strong. The stock has spent the last several days consolidating sideways and digesting gains. The lack of profit taking is positive but that doesn't mean we want to chase it. DE doesn't report earnings until November but the stock could see some movement as investors react to earnings from rival Caterpillar (CAT), who reports on Oct. 21st. There is no change in our strategy. Wait for a dip to $70.00. If triggered we'll use a stop loss at $65.95. I would only open half your normal position since this is turning into a more aggressive trade.
I prefer the 2012 LEAPS over the 2011 options.
FYI: DE might not dip all the way to $70. Keep an eye on the 50-dma.
Buy-the-Dip trigger: $70.00 (only half a position)
BUY the 2011 March $75.00 calls (DE1119C75)
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BUY the 2012 January $75.00 calls (DE1221A75)
Chart of DE:
Ford Moto Co. - F - close: 13.80 change: -0.11
Ford managed to eke out another gain for the week but momentum seems to be struggling. The stock's gains are fading lower into the afternoon, which suggests the rally is running out of gas. Shares were upgraded to a "buy" on Thursday but the stock barely moved. Another reason F could be ready to correct lower. Overall I don't see any changes from last week's comments.
I'm suggesting we use a trigger at $12.75 to launch new long-term bullish positions. If triggered we'll use a stop loss at $10.90. Our first upside target is $14.40. Our second, longer-term target is $17.40. FYI: The Point & Figure chart is bullish with a $19.50 target.
Buy-the-Dip trigger: $12.75
I prefer the 2012 calls.
BUY the 2011 March 13.00 calls (F1119C13)
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BUY the 2012 January $12.50 calls (F1221A12.5)
Chart of F:
Home Depot - HD - close: 30.70 change: -0.11
We are finally starting to see a pullback in shares of HD. This is what we've been waiting for. Traders started buying the dip near $30.50 late in the week. I still think HD can test the $30 level and its rising 50-dma.
If triggered our stop is $27.90. Our long-term target is $33.90 and $36.00. I prefer the 2012 calls over the 2011 calls.
Buy-the-Dip trigger: $30.00
I prefer the 2012 calls.
BUY the 2011 Jan $30.00 calls (HD1122A30)
BUY the 2012 Jan $30.00 calls (HD1221A30)
Chart of HD:
Nike Inc. - NKE - close: 82.00 change: +0.23
Tuesday's failed rally higher in NKE and the sideways consolidation following suggests NKE is nearing a correction. The trend is very bullish and the new NFL deal should be a winner for NKE. However, we don't want to chase it here with a rally from $70 to $83. I am suggesting a trigger to buy call LEAPS at $76.50 with a stop loss at $71.90.
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: $76.50
BUY the 2011 Jan $80 calls (NKE1122A80)
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BUY the 2012 Jan $90 calls (NKE1221A90)
Chart of NKE:
Nokia Corp. - NOK - close: 10.88 change: -0.08
The rally in NOK stalled under its 200-dma, which isn't that surprising. This coming week the stock could see some volatility. AAPL's earnings on Monday night could spark a reaction in NOK on Tuesday morning. Plus, NOK is due to report earnings on Oct. 21st. I am inching our trigger to launch positions a little higher to $10.25. More conservative traders could keep their trigger lower near $9.80. Essentially I'm expecting a pullback to this range (10.25-9.75). If we are triggered at $10.25 I'm suggesting a stop loss at $9.45.
Our first long-term target is $11.85.
Buy-the-Dip trigger: $10.25 *updated*
I prefer the 2012 calls over 2011 calls.
BUY the 2011 January $10.00 calls (NOK1122A10)
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BUY the 2012 January $10.00 calls (NOK1221A10)
Chart of NOK:
Stericycle - SRCL - close: 71.90 change: -0.00
SRCL managed to tag new intraday highs last week but shares were unable to hold on to these gains. This might suggest the rally is losing steam. The stock is overbought and we're waiting for a correction. It's possible SRCL will merely churn sideways until its earnings report on Oct. 27th. Currently I'm suggesting a trigger to buy call LEAPS on the dip at $67.00 with a stop loss at $63.40. If triggered our long-term target is $79.00.
FYI: The point and figure chart is bullish with an $89 target.
Buy-the-Dip trigger: $67.00
BUY the 2011 May $70 calls (SRCL1119E70)
Chart of SRCL:
Whiting Petroleum Corp. - WLL - close: 104.46 change: -0.40
The energy sector has continued to rally and WLL continues to participate. The stock extended its gains to hit new two-year highs. We're still waiting for a correction as the stock looks overbought given the $20 rally in the last eight weeks. Currently the plan is to buy call LEAPS on a dip to $95.50 but keep an eye on the $98.00 level, which could offer some support. If triggered our stop loss is $89.40. Our first upside target is $109.00.
FYI: Earnings are due out on Oct. 27th.
Buy-the-Dip trigger: $95.50
I prefer the 2012 calls but the spreads are a little wide!
BUY the 2011 January $100 calls (WLL1122A100)
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BUY the 2012 January $110 calls (WLL1221A110)
Chart of WLL:
Wynn Resorts - WYNN - close: 101.94 change: +0.35
WYNN refuses to correct. It's tough to keep emotions out of the game when you miss a big move like WYNN's from two weeks ago. Makes me wish we had bought the dip near $86.00 in late September. However, I'm still bullish on WYNN and the recent consolidation (in the $100-104 zone) is a positive sign that we've got more buyers than sellers. When the market does correct I'm expecting WYNN to dip toward prior resistance and what should be new support near $95. If that fails to occur then WYNN could see some profit taking after its earnings report in late October (or early November).
Right now the plan is to buy call LEAPS on a dip at $95.50 with a stop loss at $87.99. This has turned into an aggressive trade so keep your positions small (half normal size).
Buy-the-Dip trigger: $95.50 (small positions!)
BUY the 2011 Jan $100 calls (WYNN1122A100)
- or -
BUY the 2012 Jan $105 calls (WYNN1221A105)
Chart of WYNN: