We have a number of watch list candidates that we've been watching for a few weeks now and every week they continue to rally higher. Every week I say don't chase it. Eventually, this market and these stocks will correct lower. I strongly suspect that the correction could begin on Wednesday following the FOMC's announcement on any new QE program. The LEAPStrader newsletter is focused on longer-term trades in the six month to twelve month time frame so waiting for the right entry point is just part of our discipline and strategy. If we do not see a significant correction in the next two weeks then we'll consider reloading the watch list with a bunch of new candidates. Although recently the watch list has been doing a pretty good job of adding new stocks to our play list.
New Watch List Entries
AAPL - Apple Inc.
NYX - NYSE Euronext
Active Watch List Candidates
BVN - Compania de Minas Buenaventura
CERN - Cerner Corp
DE - Deere & Co
F - Ford Motor Co.
GS - Goldman Sachs
HD - Home Depot
NKE - Nike Inc.
NOK - Nokia Corp
SRCL = Stericycle Inc.
WLL - Whiting Petroleum
WYNN - Wynn Resorts Ltd.
Dropped Watch List Entries
BRK.B and DIS have both graduated to the play list. CERN has been dropped.
New Watch List Candidates:
Apple Inc. - AAPL - close: 300.98 change: -4.26
AAPL is quickly gaining ground on XOM as the largest U.S. stock with the biggest market cap. The surge from $240 toward $320 pushed AAPL's market cap past $275 billion. We like AAPL because it's the stock everyone wants to own. The recession doesn't matter because consumers are still shelling out big bucks for the iPad and iPhones and AAPL is gaining ground in the PC market as well. Yes, AAPL is seeing very strong smartphone competition from Google and AAPL will also see lots of competition in the tablet computer industry but currently AAPL remains the leader.
We're expecting a market correction soon and want to be ready to jump into AAPL if (when) shares dip. I'm suggesting a trigger to buy AAPL call LEAPS when shares hit $280. More conservative traders may want to wait for a potential dip toward the $270 area. I'm setting our stop loss at $264.00. Our first long-term target is $345.
Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork, and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple is reinventing the mobile phone with its revolutionary iPhone and App Store, and has recently introduced its magical iPad which is defining the future of mobile media and computing devices.
(source: company press release or website)
Buy-the-Dip trigger: $280.00
BUY the 2012 January $300 calls (1221A300)
- or -
BUY the 2013 January $320 calls (1319A320)
Chart of AAPL:
NYSE Euronext - NYX - close: 30.64 change: +0.23
Shares of the NYX have been consolidating sideways for the last several months. The action over the last few weeks has given the stock a much more bullish posture. The company is due to report earnings on November 2nd and I suspect the company will disappoint. Trading volumes last quarter have been very low, which should mean less profit for the NYX. Wall Street knows this so while I expect the NYX to miss estimates it shouldn't be a super big surprise. I'm looking for the stock to correct following its earnings news (and if not then, we can look for a correction with the market after the FOMC meeting). Watch the long-term trendline for support.
I'm suggesting a trigger to buy call LEAPS at $29.00 and we'll try and limit our risk with a relatively tight stop loss at $27.75. Our first target is $34.75.
NYSE Euronext (NYX) is a leading global operator of financial markets and provider of innovative trading technologies. The company's exchanges in Europe and the United States trade equities, futures, options, fixed-income and exchange-traded products. With approximately 8,000 listed issues (excluding European Structured Products), NYSE Euronext's equities markets â€“ the New York Stock Exchange, NYSE Euronext, NYSE Amex, NYSE Alternext and NYSE Arca â€“ represent one-third of the world's equities trading, the most liquidity of any global exchange group. NYSE Euronext also operates NYSE Liffe, one of the leading European derivatives businesses and the world's second-largest derivatives business by value of trading. The company offers comprehensive commercial technology, connectivity and market data products and services through NYSE Technologies. NYSE Euronext is in the S&P 500 index, and is the only exchange operator in the S&P 100 index and Fortune 500
(source: company press release or website)
Buy-the-Dip trigger: $29.00
BUY the 2012 January $30.00 calls (NYX1221A30)
Chart of NYX:
Active Watch List Candidates:
Compania de Minas Buenaventura - BVN - close: 52.89 change: +1.16
BVN has rallied to another new all-time high. The stock is up ten points in the last five weeks. We are waiting for a correction. Please note that I'm adjusting our entry point to $45.00 (from $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: $45.00 (half a position)
BUY the 2011 JUNE $50 calls (BVN1119F50) <-- new strike.
Chart of BVN:
Cerner Corp. - CERN - close: 87.83 change: +0.58
CERN reported earnings on Thursday night and initially sold off on Friday morning but traders quickly bought the dip. There is significant resistance in the $92-95 zone so we don't want to launch positions now. I am removing CERN from the watch list but I would still keep an eye on it for a pull back toward support near $82.00 and its 200-dma.
Deere & Co - DE - close: 76.80 change: +1.30
The longer-term trend for DE is up but the stock has been churning sideways in the $74-78 zone for the last three and a half weeks. When the market does finally correct the profit taking in DE could be steep. I am moving our trigger lower from $70 to $67.50 and we'll move our stop loss to $62.40.
Buy-the-Dip trigger: $67.50 (only half a position)
BUY the 2012 January $75.00 calls (DE1221A75)
Chart of DE:
Ford Moto Co. - F - close: 14.13 change: -0.09
Ford managed to hit new six-month highs last week. The stock also rallied toward its 52-week highs and overhead resistance in the $14.50 area. I am expecting this resistance to hold and we should see Ford correct soon.
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 $16.00. Our second, longer-term target is $18.00. 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:
Goldman Sachs - GS - close: 161.13 change: -2.11
Financials in general have been under performing the market lately but GS is an exception. The stock is hitting new six-month highs. I am suggesting we wait for a correction with a trigger to launch positions at $152.50. We'll use a stop loss at $147.45. If triggered our first target is $179.00.
Buy-the-Dip trigger: $152.50
BUY the 2011 April $170 calls (GS1116D170)
- or -
BUY the 2012 January $180 calls (GS1221A180)
Chart of GS:
Home Depot - HD - close: 30.90 change: -0.29
HD continues to churn sideways in the $30-32 zone. I suspect that when the market does correct shares of HD will hit their long-term trendline of support. Investors should note that HD is due to report earnings in a couple of weeks.
Currently the plan is to buy call LEAPS on a dip at $29.00. I am moving our stop loss to $26.45, just under the July 2010 low.
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: 81.44 change: +0.33
The rally in NKE has lost its momentum. Shares have produced a topping pattern over the last couple of weeks. Please note I'm adjusting our trigger down to $75.25. More conservative traders could wait for a pull back toward the rising trendline of support (see chart).
We'll use a stop loss at $71.90.
Our long-term target is $98.00.
Buy-the-Dip trigger: $75.25
BUY the 2012 Jan $90 calls (NKE1221A90)
Chart of NKE:
Nokia Corp. - NOK - close: 10.70 change: -0.33
We are still waiting for a correction in NOK too. I am adjusting our entry point down to $10.00 (from 10.25) and we'll inch the stop loss down to $9.40. Our first long-term target is $11.85.
Buy-the-Dip trigger: $10.00
BUY the 2012 January $10.00 calls (NOK1221A10)
Chart of NOK:
Stericycle - SRCL - close: 71.74 change: +0.67
SRCL hit new all-time highs earlier in the week. The stock experienced a little profit taking on its earnings report but selling was minor. Shares remain very overbought so we're waiting for a correction. Currently the plan is to buy calls 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: (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: 100.44 change: +1.91
WLL delivered a strong earnings report midweek and traders initially sold the news. Yet bulls were buying the dip on Friday. Thus far WLL has seen a mild two-week pullback. We're hoping the correction continues. I am suggesting a trigger to buy LEAPS at $94.00 but more conservative traders could look for a pullback closer to $90.00. If we are triggered at $94 we'll use a stop at $88.90. Our first upside target is $109.00.
Buy-the-Dip trigger: $94.00
BUY the 2011 March $100 calls (WLL1119C100)
- or -
BUY the 2012 January $110 calls (WLL1221A110)
Chart of WLL:
Wynn Resorts - WYNN - close: 107.16 change: +0.11
WYNN is another stock that continues to run higher without us. We don't want to chase this four-week rally. Broken resistance near $94-95 should be decent support so I'm suggesting a trigger 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 MAR $105 calls (WYNN1119C105)
- or -
BUY the 2012 Jan $110 calls (WYNN1221A110)
Chart of WYNN: