There are plenty of candidates out there but I hesitate to load up on new ones when I'm expecting some sort of pull back following the midterm elections and the FOMC meeting in early November. Plus, we already have a pretty large watch list. However, I wanted to point out a few stocks that caught my eye.
I came very close to adding RTN as a bullish candidate. A dip toward $46.00 might be an entry point but earnings are due out later this week. We'll wait and see how the market reacts to earnings. BEXP is another stock that caught my eye. Shares look very bullish but I noticed spreads on the options were a little wide. I really like MCHP at current levels and was tempted to launch new positions on it, especially with Friday's breakout from the three-week consolidation. Yet MCHP still has resistance near $32 and there are a lot of semiconductor company earnings this week that could have a negative impact on MCHP. GD is another defense name that looks ready to breakout higher. I'm watching resistance near the $65.00 level. CTAS appears to be on the verge of breaking out from a very wide and very long-term consolidation pattern. A close over $28.50 for CTAS might be a bullish entry point. MYL caught my eye and again I was tempted to launch bullish positions with the new close over its 200-dma but earnings are this week so I'd rather wait and see how investors react to MYL's earnings news.
New Watch List Entries
DIS - Walt Disney Co
GS - Goldman Sachs
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
DO has graduated to the play list and ESRX has moved to the new plays section.
New Watch List Candidates:
Walt Disney Co. - DIS - close: 34.97 change: +0.29
If you believe we are not headed for a double dip recession then it's not a big jump to expect improvement in consumer spending, which should bode well for the likes of DIS. This stock has been consolidating sideways for almost six months now and looks poised to breakout higher soon. I'm suggesting we wait for DIS to close over $35.50 before launching long-term bullish positions. If triggered we'll use a stop loss at $33.40. The $38 level is overhead resistance but our first target is $39.75. FYI: DIS is due to report earnings on November 11th.
Since its founding in 1923, The Walt Disney Company and its affiliated companies have remained faithful to their commitment to produce unparalleled entertainment experiences based on the rich legacy of quality creative content and exceptional storytelling. The Walt Disney Company, together with its subsidiaries and affiliates, is a leading diversified international family entertainment and media enterprise with four business segments: media networks, parks and resorts, studio entertainment and consumer products.
(source: company press release or website)
Breakout trigger: Wait for DIS to close over $35.50
BUY the 2012 January $40.00 call (DIS1221A40)
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BUY the 2012 January $40.00 call (DIS1319A40)
Chart of DIS:
Goldman Sachs - GS - close: 157.76 change: -1.54
Investors remain nervous over the financials but GS is outperforming its peers. The worst seems to be behind it for this stock as GS hits new relative highs. On a short-term basis GS has produced a bearish reversal but that could offer us a new entry point. I am suggesting a trigger to buy call LEAPS at $152.50 and we'll use a stop loss at $147.45. If triggered our first target is $179.00.
Founded in 1869, Goldman Sachs remains one of the largest investment banking firms in the world.
Buy-the-Dip trigger: $152.50
BUY the 2011 April $170 calls (GS1116D170)
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BUY the 2012 January $180 calls (GS1221A180)
Chart of GS:
Active Watch List Candidates:
Berkshire Hathaway - BRK.B - close: 83.34 change: +0.33
Shares of BRK.B lost three cents for the entire week as they continue to bounce around the $82-84 range. I see no change from my prior comments.
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. If BRK.B does breakout I'm suggesting we wait for the stock to close over $84.50 and then launch positions the next morning with a stop loss 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)
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On a breakout - BUY the 2012 Jan $90 calls (BRKB1221A90)
Chart of BRK.B:
Compania de Minas Buenaventura - BVN - close: 50.35 change: +0.92
Like most commodity-related stocks the rally in BVN paused on Tuesday in reaction to China's interest rate spike and the big bounce in the dollar. There hasn't been much follow through lower yet but we still don't want to chase it. It might take a couple of weeks but I'm suggesting we wait for a dip to $44.00. If triggered use a stop loss at $39.90.
We want to keep positions small (half your normal trade size) to limit our risk. 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: 88.11 change: +2.10
CERN has spent the last three weeks consolidating sideways in the $84-88 zone but on Friday shares managed to close above this level (barely). I am almost tempted to chase it here. However, CERN is due to report earnings on October 28th, after the market's closing bell. The stock could see some profit taking on the news so we'll wait. Right now the plan is to launch bullish positions on a dip to $82.00 with a stop loss at $77.75. Our first long-term target is $92.50.
Buy-the-Dip trigger: $82.00
BUY the 2012 January $90 calls (CERN1221A90)
Chart of CERN:
Deere & Co - DE - close: 77.25 change: +0.20
DE is still inching higher and closed the week at new two-year highs. There is no change from my prior comments. We do not want to chase it. Given DE's summer and fall rally higher this is turning into a more aggressive trade. If we are triggered I'm suggesting we use small positions (only half your normal trade size) to limit our risk. Right now the plan is to wait for a dip to $70.00 to open bullish trades. If triggered use a stop at $65.95.
Buy-the-Dip trigger: $70.00 (only half a position)
BUY the 2012 January $75.00 calls (DE1221A75)
Chart of DE:
Ford Moto Co. - F - close: 13.95 change: +0.14
Traders quickly bought the dip on Tuesday and Ford closed the weak near its six-month highs. I still don't want to chase this stock.
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
BUY the 2012 January $12.50 calls (F1221A12.5)
Chart of F:
Home Depot - HD - close: 31.48 change: -0.33
HD slipped toward $30.20 before bouncing sharply last week. Unfortunately that wasn't low enough to hit our trigger at $30.00. You might think this odd but I'm actually moving our trigger lower, down to $29.00. We are facing a week with two reports on home sales and two reports on home prices. I suspect these will disappoint again and home-related stocks could see some selling pressure. Our new trigger is $29.00 and our stop is unchanged at $27.90.
Our long-term target is $33.90 and $36.00.
Buy-the-Dip trigger: $29.00
BUY the 2012 Jan $30.00 calls (HD1221A30)
Chart of HD:
Nike Inc. - NKE - close: 81.92 change: -0.19
NKE only lost eight cents for the week as traders quickly bought the dip on Tuesday. NKE remains overbought and due for a real correction. We don't want to chase it here. 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.
Buy-the-Dip trigger: $76.50
BUY the 2012 Jan $90 calls (NKE1221A90)
Chart of NKE:
Nokia Corp. - NOK - close: 11.06 change: -0.22
NOK saw a little excitement on Thursday as the market reacted to the company's earnings report. NOK delivered a profit of 0.14 euros per share versus the 0.09 euro estimate. Revenues also beat expectations and the stock spiked to $11.62 on Thursday but the 200-dma held its gains in check.
I am still expecting a more significant pull back in the next three to four weeks. We'll keep our trigger at $10.25. More conservative traders could eye the 50-dma and wait for a dip to the moving average instead.
If we are triggered I'm suggesting a stop loss at $9.45.
Our first long-term target is $11.85.
Buy-the-Dip trigger: $10.25
BUY the 2012 January $10.00 calls (NOK1221A10)
Chart of NOK:
Stericycle - SRCL - close: 72.21 change: +0.00
This could be the week. I'm about ready to give up on SRCL as a candidate but the company reports earnings on October 27th, after the closing bell. Shares should see some profit taking on the news, which might provide an entry point. Wall Street is expecting a profit of 63 cents a share. I am suggesting a trigger to open bullish positions on a dip at $67.00 with a stop loss at $63.40. Right now I'm suggesting we only use small positions (half your normal trade size) to limit our risk.
If triggered our long-term target is $79.00.
FYI: The point and figure chart is bullish with an $89 target. (May options are the longest options currently available.)
Buy-the-Dip trigger: $67.00 (half position)
BUY the 2011 May $70 calls (SRCL1119E70)
Chart of SRCL:
Whiting Petroleum Corp. - WLL - close: 100.97 change: -0.51
It looks like the rally in WLL has finally paused. Shares are starting to roll over. I suspect WLL could see a hefty pull back as it reports earnings this week on October 27th, after the closing bell. Analysts are estimating a profit of $1.33 a share.
I am adjusting our entry point strategy and moving the trigger down to $94.00 with a stop loss at $88.90. Our first upside target is $109.00.
Buy-the-Dip trigger: $94.00
BUY the 2011 March $100 calls (WLL1119C100)
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BUY the 2012 January $110 calls (WLL1221A110)
Chart of WLL:
Wynn Resorts - WYNN - close: 104.42 change: +1.18
Shares of WYNN continue to outperform. Traders bought the dip on Tuesday and WYNN rebounded to new relative highs. Earnings will be here quickly on November 2nd and WYNN could see a sell the news reaction so I'm willing to wait. The plan is to launch bullish positions 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).
I have adjusted our suggested options.
Buy-the-Dip trigger: $95.50 (small positions!)
BUY the 2011 MAR $105 calls (WYNN1119C105)
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BUY the 2012 Jan $110 calls (WYNN1221A110)
Chart of WYNN: