Editor's Note:

The market's trend is up but stocks tend to peak during the first half of earnings season. We're expecting a pull back in the next two or three weeks. After the big gains we've already seen the correction could be sharp! That's why some of our triggers are so low.

In addition to tonight's new candidates I would check out the follow stocks and keep them on your radar screen for an entry point in February. Additional stocks on my watch list: AMR, IPI, HLIT, CELL, MTG, PMI, JBLU, RYL, CBR, A, OXY, and PG.


New Watch List Entries

NFX - Newfield Exploration

UNH - UnitedHealth Group, Inc


Active Watch List Candidates

AKS - AK Steel holding

CMP - Compass Minerals

FLR - Fluor Corp.

MAT - Mattel Inc.

MON - Monsanto Co.

NYB - New York Community Bancorp

VZ - Verizon Communications

X - U.S. Steel Corp


Dropped Watch List Entries

UPS was removed.


New Watch List Candidates:

Newfield Exploration Co. - NFX - close: 71.06

NFX is an oil service stock. Shares saw a huge rally off its late August lows. The rally ran out of gas in December and shares have been consolidating sideways. I'm expecting a breakdown under support at $70.00 soon. When that happens it could be a quick journey lower toward the next major level of support at $60.00. I'm suggesting a trigger to open long-term bullish positions at $60.50. If triggered we'll use a stop loss at $54.40. Our long-term targets are the $75 and $85 levels. FYI: The P&F chart is bullish with a $90 target.

Company Info

Buy-the-Dip trigger: $60.50

BUY the 2012 January $65 calls (NFX1221A65)

- or -

BUY the 2013 January $70 calls (NFX1319A70)

Chart of NFX:

Originally listed on the Watch List: 01/15/11


UnitedHealth Group, Inc. - UNH - close: 40.77

Healthcare stocks have been garnering bullish attention. The sector is breaking out to new multi-year highs. Helping lead the charge is UNH. Short-term UNH looks a little overbought. I am suggesting we wait for a dip back to $36.50 as an entry point to open long-term positions. If triggered we'll use a stop loss at $33.45. FYI: The P&F chart is bullish with a $67 target.

Company Info

Buy-the-Dip trigger: $36.50

BUY the 2012 January $40 calls (UNH1221A40)

- or -

BUY the 2013 January $40 calls (UNH1319A40)

Chart of UNH:

Originally listed on the Watch List: 01/15/11


Active Watch List Candidates:


AK Steel Holding - AKS - close: 15.36

01/15 update: Shares of AKS were downgraded again. The stock has sunk to its 200-dma. As you know I'm expecting a market-wide correction relatively soon. When that happens AKS could over correct. I am moving our trigger to buy calls from $14.00 down to $12.25. We'll move our stop loss to $10.75. The 2010 low was $11.34.

Buy-the-Dip trigger: $12.25 <-- new trigger

BUY the 2012 January $15.00 calls (AKS1221A15)

- or -

BUY the 2013 January $15.00 calls (AKS1319A15)

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


Compass Minerals - CMP - close: 89.14

01/15 update: The stock market is breaking out to new highs and yet CMP is still consolidating sideways under resistance near $90-91. Wait for the correction. Right now I'm suggesting a trigger to open positions at $80.50. If triggered we'll use a stop loss at $75.75. Unfortunately, CMP does not have any LEAPS available and the longest dated options are 2011 Junes.

Buy-the-Dip trigger: $80.50

BUY the 2011 June $85.00 calls (CMP1118F85)

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


Fluor Corp. - FLR - close: 71.19

01/15 update: FLR was a new watch list candidate last week. If I had known before hand shares were going to surge +10% we would have considered a different strategy. As it stands now FLR looks overbought. There is some support near $65 but when the markets does correct lower FLR could over correct. I am adjusting our buy-the-dip entry point to $60.50. We'll use a stop loss at $54.75. Buy-the-Dip trigger: $60.50 <-- new trigger

BUY the 2012 January $65 calls (FLR1221A65)

- or -

BUY the 2013 January $70 calls (FLR1319A70)

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


Mattel Inc. - MAT - close: 23.95

01/15 update: MAT has been trying to hold support near $24 and its 100-dma but it's not doing a very good job. Just to be on the safe side I'm adjusting our buy-the-dip trigger to $21.00 and our stop loss to $19.75. Our long-term targets are $29.00 and $36.00.

Buy-the-Dip trigger: $21.00 <-- 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


Monsanto Co. - MON - close: 74.33

01/15 update: Agriculture names were en vogue last week. MON rallied to new multi-month highs. We don't want to chase this move. 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 2012 January $70 calls (MON1221A70)

- or -

BUY the 2013 January $75 calls (MON1319A75)

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


New York Community Bancorp - NYB - close: 18.69

01/15 update: Hmm... financials were showing lots of relative strength last week. Yet NYB was not really participating. That's a troubling sign. If NYB hits our buy-the-dip entry point at $17.00, we only want to open small positions (1/2 or 1/4 your normal trade size). If triggered we'll use a stop loss at $15.75.

Buy-the-Dip trigger: $17.00

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: 72.48

01/15 update: I am removing UPS from the watch list. I'd rather find candidates that will move faster than UPS' recent performance. Readers may want to keep this stock on their watch list anyway.

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


Verizon Communications - VZ - close: $35.93

01/15 update: VZ spent the week consolidating sideways. Bigger picture VZ still looks poised to correct lower. I am moving our trigger to launch positions down to $33.00 and our stop loss down to $31.45. Our long-term targets are $40.00 and $44.00.

Buy-the-Dip trigger: $33.00

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: 54.67

01/15 update: X's oversold bounce failed twice near $58.00. Short-term traders may want to consider bearish put positions and target a drop toward $50.00. I'm suggesting we launch long-term bullish positions when X hits $50.50. If triggered we'll use a stop at $44.80. Our long-term targets are $64.75 and $74.75.

Buy-the-Dip trigger: $50.50

BUY the 2012 January $55.00 calls (X1221A55)

- or -

BUY the 2013 January $60.00 calls (X1319A60)

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