Editor's Note:

The stock market is still drifting higher. This trend might continue for another week or two. Then in mid January, around the onset of earnings season, there is a good chance the market will correct. That's when we will probably see our next significant entry point for long-term bullish positions. With this in mind, I'm adding new candidates with the expectation we'll see a correction in January and I've adjusted some of the entry points on some of our current candidates below.

Last week I listed about fifteen of the stocks on my radar. You can view that list here.

-James

P.S. I was going to add RMD as a bullish candidate to buy calls on the dip at $34.00 but the spreads on the options are just way too wide.


New Watch List Entries

AKS - AK Steel holding

CMP - Compass Minerals

NYB - New York Community Bancorp


Active Watch List Candidates

BVN - Compania de Minas Buenaventura

GME - GameStop Corp

MAT - Mattel Inc.

TGT - Target Corp

UPS - United Parcel Service

X - U.S. Steel Corp


Dropped Watch List Entries

F, SBUX, and WLL were removed from the watch list. USG graduated to our play list.


New Watch List Candidates:

AK Steel Holding - AKS - close: 16.56

Company Info

If the global economy continue to recover then demand for steel should continue to improve. This past month shares of AKS broke out from a major consolidation phase and past significant resistance. We want to buy call LEAPS on a correction back to the $15.00 level, which should be new support. If triggered we'll use a stop loss at $12.75. FYI: The Point & Figure chart for AKS shows a bullish breakout over resistance and a $25 long-term target.

Buy-the-Dip trigger: $15.00

BUY the 2012 January $15.00 calls (AKS1221A15)

- or -

BUY the 2013 January $20.00 calls (AKS1319A20)

Chart of AKS:

Originally listed on the Watch List: 12/25/10


Compass Minerals - CMP - close: 88.70

Company Info

The outlook for commodities remains bullish. Growing demand and a weaker U.S. dollar should both contribute to higher prices. Fertilizer has been a hot industry. CMP has managed to raise prices on some of its products recently, which suggests confidence by management. The stock has broken out to new highs, past major resistance in the $82.50 area. I am suggesting we wait for a correction to $82.75 as our entry point to buy calls. If triggered we'll use a stop loss at $77.95 although we might be able to get away with a stop closer to $80.00. Unfortunately, CMP does not have any LEAPS available and the longest dated options are 2011 Junes.

Buy-the-Dip trigger: $82.75

BUY the 2011 June $90.00 calls (CMP1118F90)

Chart of CMP:

Originally listed on the Watch List: 12/25/10


New York Community Bancorp - NYB - close: 19.30

Company Info

The banking and financial sector have helped lead the market higher in December. If this rally is going to continue the banks will need to correct before continuing higher. That's when we want to jump on board and increase our exposure to this sector. NYB is a mid-sized bank that has broken out from a significant consolidation. I am suggesting we use a buy-the-dip trigger at $18.00. It could take a few weeks for NYB to retrace that far. If triggered we'll start with a stop loss at $16.65. FYI: The Point & Figure chart for NYB is bullish with a long-term target of $33.50.

Buy-the-Dip trigger: $18.00

BUY the 2012 January $17.50 calls (NYB1221A17.5)

- or -

BUY the 2013 January $20.00 calls (NYB1319A20)

Chart of NYB:

Originally listed on the Watch List: 12/25/10


Active Watch List Candidates:


Compania de Minas Buenaventura - BVN - close: 48.24

I am long-term bullish on BVN but I'm growing more short-term cautious (see tonight's market commentary). We are moving our trigger to buy calls on BVN down to $46.00 and conservative traders may want to put their trigger near $43-42 instead. Keep your position size small to limit your risk.

Buy-the-Dip trigger: $45.00 (half a position)

BUY the 2011 JUNE $50 calls (BVN1119F50)


Ford Moto Co. - F - close: 16.78

Shares of Ford barely moved at all last week. The consolidation looks like it wants to breakout higher but I don't want to chase it. I am removing Ford from the watch list. It could take a while before we see an entry point for long-term positions.


Gamestop Corp. - GME - close: $22.22

GME was showing some relative strength late last week. I am raising our trigger to open positions from $21.00 to $21.25. More conservative traders may want to wait for a dip near the 50 or 200-dma instead. 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)

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


Mattel Inc. - MAT - close: 25.88

The action in MAT in just the last two trading days looks like a short-term bearish reversal. The stock should have some support near $25.00 but I'm expecting a market correction in January. We are moving our trigger to launch long-term positions to $24.00. If triggered we want to use a stop loss at $22.75. Our long-term targets are $29.00 and $36.00.

Buy-the-Dip trigger: $24.00

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


Starbucks Corp. - SBUX - close: 32.63

SBUX is hovering near its highs and remains inside its bullish channel. I am very tempted to raise our buy-the-dip trigger. However, instead I am removing SBUX from our watch list. It could be weeks before we see an entry point for long-term positions.


Target Corp. - TGT - close: 60.26

TGT was showing some relative strength last week and rallied to new three-year highs. It would be very tempting to buy calls now but I'm expecting a correction in the next few weeks. We'll keep our trigger at $57.00 for now. 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)

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


United Parcel Service - UPS - close: 72.73

UPS is still consolidating sideways. I am moving our trigger back down to $70.10. More conservative traders could look for a dip near the rising 100-dma instead. 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: $70.10

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: 118.21

WLL continues to show relative strength and hit new highs last week. Unfortunately the stock just looks too overbought for us to consider positions any time soon. I am removing it from the watch list but would keep this stock on your radar screen for when the market eventually corrects.


United States Steel Corp. - X - close: 58.10

It looks like the rally in X may be running out of gas. It's time for some profit taking. I am suggesting bullish positions on a dip at $54.00. More conservative traders could just wait and see where X finds support again (it could be $52 or $50). If triggered we will start the play with a stop loss at $48.75. Our long-term targets are $64.75 and $74.75.

Buy-the-Dip trigger: $54.00

BUY the 2012 January $60.00 calls (X1221A60)

- or -

BUY the 2013 January $60.00 calls (X1319A60)

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