Editor's Note:

Our bias remains positive. We just need a decent bout of profit taking so we can take advantage of the dip to launch new bullish positions.

-James


New Watch List Entries

GME - GameStop Corp

TGT - Target Corp

USG - U S G Corp

X - U.S. Steel Corp


Active Watch List Candidates

BVN - Compania de Minas Buenaventura

F - Ford Motor Co.

MAT - Mattel Inc.

SBUX - Starbucks Corp.

UPS - United Parcel Service

WLL - Whiting Petroleum


Dropped Watch List Entries

NFX has been removed from the watch list.


New Watch List Candidates:

Gamestop Corp. - GME - close: $22.24

Company Info

Strategy:
Video game sales are on the mend. The market is feeling more comfortable about an improvement in consumer spending as the economy improves next year. GME looks like a potential trade with shares breaking a long-term trendline of lower highs. I am suggesting we launch positions on a dip at $21.25. Depending on your risk tolerance we could open positions anywhere in the $21.25-20.00 zone. If triggered I'm suggesting a stop loss at $18.90. I would be very surprised to see GME breakdown under $20.00. Our long-term targets are $24.90 and $29.75.

Buy-the-Dip trigger: $21.25

BUY the 2012 January $22.50 call (GME1221A22.5)

- or -

BUY the 2013 January $25.00 call (GME1319A25)

Chart of GME:

Originally listed on the Watch List: 12/11/10


Target Corp. - TGT - close: 58.95

Company Info

Strategy:
TGT is another play on improving consumer sentiment and consumer spending. The rally in TGT has stalled near resistance at $60.00 but the big picture trend is higher. I am suggesting we launch long-term bullish positions on a dip at $57.00. Actually we can use the $57.00-55.00 zone as our entry point range. If triggered we'll start with a stop loss at $53.75. Our long-term target is $69.75.

Buy-the-Dip trigger: $57.00

BUY the 2012 January $60 calls (TGT1221A60)

- or -

BUY the 2013 January $65 calls (TGT1319A65)

Chart of TGT:

Originally listed on the Watch List: 12/11/10


U S G Corp. - USG - close: 14.65

Company Info

Strategy:
USG has spent the last five and a half months building a bottom in the $11.50-15.00 zone. The stock has started to see a trend of higher lows and USG is getting closer to breaking out past resistance near $15.00 and its 200-dma. We want to launch bullish positions on a breakout past $15.00. I'm suggesting a trigger at $15.25. If triggered our first long-term target is $19.90. Our second is $24.75. We'll start the play with a stop loss at $12.75. If USG fails at $15.00 again then nimble traders may want to consider buying calls on a dip or a bounce near $13.00 but if you do I'd use a very tight stop loss (say $12.40). FYI: Investors may want to note that USG has a relatively high amount of short interest. The most recent data listed short interest at almost 19% of the 69 million-share float. A breakout could spark some short covering.

Breakout trigger: $15.25

BUY the 2012 January $20.00 calls (USG1221A20)

- or -

BUY the 2013 January $20.00 calls (USG1319A20)

Chart of USG:

Originally listed on the Watch List: 12/11/10


United States Steel Corp. - X - close: 53.61

Company Info

Strategy:
U.S. Steel is another stock with a high degree of short interest. The latest reading put shorts at 20% of the 143 million-share float. With X in breakout mode it's got to be tough on the bears. Investor sentiment has turned bullish for X with the breakout past resistance near $50.00 and its 200-dma. I am suggesting we launch long-term bullish positions on a pull back to $50.75. We'll start the play with a stop loss at $45.75. Our long-term targets are $64.75 and $74.75.

Buy-the-Dip trigger: $50.75

BUY the 2012 January $60.00 calls (X1221A60)

- or -

BUY the 2013 January $60.00 calls (X1319A60)

Chart of X:

Originally listed on the Watch List: 12/11/10


Active Watch List Candidates:


Compania de Minas Buenaventura - BVN - close: 53.17

BVN just tested support near $49.00 for the second time in two weeks. While it looks like BVN might bounce from here the correction may not be over yet. I am actually moving our trigger to launch long-term positions to $46.00 and we'll move the stop loss to $43.75. Keep your position size small.

Buy-the-Dip trigger: $46.00 (half a position)

BUY the 2011 JUNE $50 calls (BVN1119F50)


Ford Moto Co. - F - close: 16.73

Ford has spent the last week and a half consolidating sideways. Short-term traders may want to consider buying calls on a breakout over $17.00. We're looking for a long-term entry point so I'm suggesting we wait for a dip to $14.50. If we don't see Ford begin correcting in the next two weeks I'll remove it from the watch list. If we do get triggered I would start with a small position and slowly build a position over time. If triggered we want to use a stop loss at $12.95.

Buy-the-Dip trigger: $14.50

BUY the stock - or -
BUY the 2012 January $15.00 calls (F1221A15) - or -
BUY the 2012 January $17.50 calls (F1319A17.5)


Mattel Inc. - MAT - close: 25.48

There is no change from my prior comments on MAT. We want to buy call LEAPS on a pull back into the $25.00-24.00 zone. Keep in mind that MAT doesn't move very fast but the trend is up and the outlook for the consumer is improving. I am adding the 2013 calls to our potential trade. If triggered at $25.00 we want to use a stop loss at $22.75. Our long-term targets are $29.00 and $36.00.

Buy-the-Dip trigger: $25.00

BUY the 2012 January $25.00 calls (MAT1221A25)

- or -

Buy the 2013 January $25.00 calls (MAT1319A25)

Originally listed on the Watch List: 12/04/11


Newfield Exploration - NFX - close: 72.37

NFX continues to show very impressive relative strength. Unfortunately the stock is very overbought. It could take a long time before NFX sees a big enough correction that I would want to launch a long-term position. Thus I'm temporarily removing it from the watch list. Short-term traders may want to keep an eye on it.


Starbucks Corp. - SBUX - close: 32.59

SBUX hit new three-year highs again last week. Shares remain overbought following the late summer rally. While I expect shares of SBUX to find support in the $31-30 zone a real correction would have SBUX retesting the $28.00 area. We will keep our buy-the-dip trigger at $28.50 for now but it could take weeks before SBUX corrects that low.

Buy-the-Dip trigger: $28.50

BUY the 2012 January $30.00 calls (symbol: SBUX1221A30)


United Parcel Service - UPS - close: 72.89

The transport sector continues to show strength. The breakout in the last three weeks is very bullish on a long-term time frame. Yet short-term the transports and UPS look a little overbought. I am inching up our buy-the-dip trigger to $70.55. If triggered we'll use a stop loss at $65.90. Our long-term targets are $79.50 and $87.50.

Buy-the-Dip trigger: $70.55

BUY the 2012 January $75 calls (UPS1221A75)

- or -

BUY the 2013 January $80 calls (UPS1319A80)

Originally listed on the Watch List: 12/04/10


Whiting Petroleum Corp. - WLL - close: 113.61

WLL tagged new highs again last week. The action on Wednesday looks like a short-term bearish reversal. WLL could pull back toward its trend of higher lows. Aggressive traders may want to buy calls on a dip into the $107-105 zone. I'm suggesting we wait for a pull back to $102.50. If triggered use a stop at $95.90.

Buy-the-Dip trigger: $102.50

BUY the 2011 March $100 calls (WLL1119C100)

- or -

BUY the 2012 January $110 calls (WLL1221A110)