Editor's Note:

You might look at some of the triggers on our watch list and think I'm dreaming. However, we are expecting a market-wide correction in the next three to four weeks. Stocks could easily see a -5% to -10% pull back over that time period. We want to be very cautious on launching new long-term bullish positions. Please note that I have adjusted most of the triggers on the watch list below to anticipate this correction.

In addition to tonight's new candidates I'm listing a few stocks on my watch list. Considering putting these stocks on your radar screen and wait for a correction and potential entry point in late January or early February.

A few stocks on my watch list: A, CBR, SPF, USU, LNG, LDL, TASR, PENN, PMI, RYL, JBLU, MXIM.


New Watch List Entries

FLR - Fluor Corp.

MON - Monsanto Co.


Active Watch List Candidates

AKS - AK Steel holding

CMP - Compass Minerals

MAT - Mattel Inc.

NYB - New York Community Bancorp

UPS - United Parcel Service

VZ - Verizon Communications

X - U.S. Steel Corp


Dropped Watch List Entries

BVN, GME, and TGT all graduated to the play list.


New Watch List Candidates:

Fluor Corp. - FLR - close: 65.92

Company Info

Investors are pretty optimistic about the global economy improving in 2011. The market has been bidding up industrials, including big construction companies like FLR. The stock appears to have stalled at new two-year highs after a very strong two-month rally. We want to be ready to hop on board when FLR corrects lower.

I am suggesting we use a buy-the-dip trigger at $57.50. If triggered we'll use a stop loss at $49.90. Our long-term targets are $69.00 and $79.00. Buy-the-Dip trigger: $57.50

BUY the 2012 January $65 calls (FLR1221A65)

- or -

BUY the 2013 January $70 calls (FLR1319A70)

Chart of FLR:

Originally listed on the Watch List: 01/08/11


Monsanto Co. - MON - close: 71.79

Company Info

MON is another play on the improving economy. Farmers are going to need more fertilizer as demand picks up for their crops. The stock has seen a nice rally in the last three weeks. We want to wait for a correction. I'm suggesting a trigger to open long-term bullish positions at $64.00. If triggered we'll use a stop loss at $59.75. Our targets are $79.00 and $87.50. Buy-the-Dip trigger: $64.00

BUY the

- or -

BUY the

Chart of MON:

Originally listed on the Watch List: 01/08/11


Active Watch List Candidates:


AK Steel Holding - AKS - close: 15.36

Shares of AKS were downgraded to a "sell" by Goldman Sachs on Friday. The stock plunged -7.4%. The low was $15.08. AKS looks like it's trying to bounce from its 200-dma. We have a trigger to buy calls at $15.00. However, since I'm still expecting a market correction in the second half of January we will adjust our trigger point. We'll move our trigger to open positions down to $14.00 and we'll move our stop loss to $11.90.

Buy-the-Dip trigger: $14.00 <-- new trigger

BUY the 2012 January $15.00 calls (AKS1221A15)

- or -

BUY the 2013 January $20.00 calls (AKS1319A20)

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


Compass Minerals - CMP - close: 87.79

It looks like CMP is ready to correct lower but shares have found support at their 30-dma. I am adjusting our entry point lower. Instead of $82.75 let's wait for a dip to $80.50 since the $80.00 level should be strong support, soon to be bolstered by its 200-dma. We'll move the stop loss to $75.75. Unfortunately, CMP does not have any LEAPS available and the longest dated options are 2011 Junes.

Buy-the-Dip trigger: $80.50 <-- new trigger

BUY the 2011 June $85.00 calls (CMP1118F85) <-- new strike

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


Mattel Inc. - MAT - close: 24.18

We've been expecting a correction in shares of MAT but the stock is falling a bit faster than I thought it would. The $24.00 level should be support but the market has yet to correct lower. The low on Friday was $24.08 so we're not triggered yet. I'm moving our entry point from $24.00 down to $22.10. We'll move our stop loss to $19.90. Our long-term targets are $29.00 and $36.00.

Buy-the-Dip trigger: $22.10 <-- new trigger

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


New York Community Bancorp - NYB - close: 18.63

I still think the $18.00 level should offer some support. Once again we're expecting a market pull back in the second half of January. I'd rather be conservative with our entry points. We'll move our trigger to buy calls on NYB down from $18.00 to $17.00. We'll move the stop loss to $15.75.

Buy-the-Dip trigger: $17.00 <-- new trigger

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

- or -

BUY the 2013 January $20.00 calls (NYB1319A20)

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


United Parcel Service - UPS - close: 72.15

We're going to play it safe on UPS too. The $70.00 level should be support but we'll move our trigger to launch long-term trades down to $68.00. I'll move the stop loss to $64.80. Our long-term targets are $79.50 and $87.50.

Buy-the-Dip trigger: $68.00 <-- new trigger

BUY the 2012 January $75 calls (UPS1221A75)

- or -

BUY the 2013 January $80 calls (UPS1319A80)

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


Verizon Communications - VZ - close: $35.93

VZ surged to new highs early in the week. Speculation is rampant that VZ and APPL will announce a new iPhone for VZ's network very soon. There is a chance VZ will see a sell-the-new move following the announcement. It is worth noting that the sell-off on Thursday-Friday makes last week look like a top for VZ.

I'm suggesting a trigger to buy call LEAPS at $33.75. If triggered we'll use a stop loss at $31.75. Our long-term targets are $40.00 and $44.00. FYI: The Point & Figure chart for VZ is bullish with a long-term target of $44.00.

Buy-the-Dip trigger: $33.75

BUY the 2012 January $35.00 calls (VZ1221A35)

- or -

BUY the 2013 January $35.00 calls (VZ1319A35)

Originally listed on the Watch List: 01/01/11


United States Steel Corp. - X - close: 56.14

We have been waiting for a correction in X and it looks like the pull back has begun with Friday's -4.9% decline. I am moving our trigger to launch long-term positions down from $54.00 to $50.50. We'll move our stop loss to $44.90. Our long-term targets are $64.75 and $74.75.

Buy-the-Dip trigger: $50.50 <-- new trigger

BUY the 2012 January $55.00 calls (X1221A55) <-- new strike

- or -

BUY the 2013 January $60.00 calls (X1319A60)

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