Editor's Note:

It looks like the market correction may have started. The next two or three weeks could offer a great entry point.


New Watch List Entries

BEAV - BE Aerospace Inc.

JRCC - James River Coal Co.

MD - MEDNAX Inc.

TIF - Tiffany & Co.


Active Watch List Candidates

AKS - AK Steel holding

CMP - Compass Minerals

FLR - Fluor Corp.

MAT - Mattel Inc.

MON - Monsanto Co.

NFX - Newfield Exploration

NYB - New York Community Bancorp

UNH - UnitedHealth Group, Inc

VZ - Verizon Communications

X - U.S. Steel Corp


Dropped Watch List Entries

- None


New Watch List Candidates:

BE Aerospace Inc. - BEAV - close: 38.05

The defense and aerospace sector has seen the rally stall at resistance. It's time for a pull back. We want to be ready when that happens. Wait for BEAV to dip to $32.50 as our entry point to buy long-term calls. If triggered at $32.50 we'll use a stop loss at $29.45. BEAV doesn't have LEAPS so we'll have to settle for 2011 July calls. FYI: Earnings are due out on February 3rd.

Company Info

Buy-the-Dip trigger: $32.50

BUY the 2011 July $35.00 calls (BEAV1116G30)

Chart of BEAV

Originally listed on the Watch List: 01/22/11


James River Coal Co. - JRCC - close: 21.50

The correction in coal stocks has been pretty painful the last couple of weeks. I don't think the pull back is over yet either. However, when the sell-off does end we want to increase our exposure to this group. Aggressive traders might want to consider bullish positions near $20.00. I am suggesting a trigger to launch positions at $18.50. If triggered we'll use a stop loss at $15.90. JRCC doesn't have LEAPS so we'll have to settle for 2011 June calls. FYI: Earnings are due out in late February.

Company Info

Buy-the-Dip trigger: $18.50

BUY the 2011 June $20 calls (JRCC1118F20)

Chart of JRCC

Originally listed on the Watch List: 01/22/11


MEDNAX Inc. - MD - close: 65.90

MD is a specialized healthcare company and the stock has been a very consistent winner for investors since the August lows. Now the stock has finally hit resistance at $70 and it's beginning to pull back. The $60 area should be support. I am suggesting we launch bullish positions at $61.00. If triggered we'll use a stop loss at $55.90. MD doesn't have LEAPS so we'll have to settle for 2011 August calls. FYI: Earnings are expected on Feb. 3rd.

Company Info

Buy-the-Dip trigger: $61.00

BUY the 2011 August $65 calls (MD1120H65)

NOTE: Keep your position size small. The options on MD wide spreads, which puts us at a disadvantage!

Chart of MD

Originally listed on the Watch List: 01/22/11


Tiffany & Co. - TIF - close: 57.83

Shares of TIF have been soaring since the August lows but the rally finally peaked in December. Now shares are in correction mode and look like they are headed for the $52.50-50.00 zone. We want to use a trigger to launch bullish positions on a dip at $52.50. If triggered we'll use a stop loss at $47.75.

Company Info

Buy-the-Dip trigger: $52.50

BUY the 2012 January $60 calls (TIF1221A60)

Chart of TIF

Originally listed on the Watch List: 01/22/11


Active Watch List Candidates:


AK Steel Holding - AKS - close: 14.10

01/22 update: As expected the correction in AKS continues. The stock is now testing support near $14.00 and I'm expecting it to break. Shares should find much stronger support near $12.00. We want to launch bullish positions at $12.25 with a stop loss at $10.75. The 2010 low was $11.34.

FYI: Earnings are out on Jan. 25th.

Buy-the-Dip trigger: $12.25

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: 85.35

01/22 update: Traders sold the rally on Tuesday and CMP has fallen from $90.50 to almost $85 in three days. The $85 level is short-term support but I'm expecting it to fail. Our plan is to buy calls on a dip at $80.50 with a stop at $75.75. Unfortunately, CMP does not have any LEAPS available and the longest dated options are 2011 Junes.

Look for CMP's earnings on Feb. 7th.

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: 71.02

01/22 update: FLR produced what appears to be a bearish reversal on Wednesday last week but it hasn't seen any follow through lower yet. There is no change from my prior comment. We want to launch bullish positions at $60.50 with a stop at $54.74.

FLR is due to report earnings on Feb. 23rd. Buy-the-Dip trigger: $60.50

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

01/22 update: MAT is still slowly drifting sideways. There is no change from my prior comments. We want to open bullish positions at $21.00 with a stop loss at $19.75. Keep your position size small to limit your risk. Our long-term targets are $29.00 and $36.00.

FYI: MAT will report earnings on Feb. 2nd.

Buy-the-Dip trigger: $21.00

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


Monsanto Co. - MON - close: 70.11

01/22 update: It looks like the correction in MON has begun. Nimble traders could try buying puts to capture the drop toward $64. I am suggesting we open bullish positions at $64.00 with 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


Newfield Exploration Co. - NFX - close: 68.34

01/22 update: If you do any short-term trading then NFX looks like a bearish candidate. I would buy puts right now and exit near $63.50 or target $61.00. I have NFX listed as a long-term LEAPS candidate but we want to wait to buy calls 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: Earnings are Feb. 16th.

Buy-the-Dip trigger: $60.50

BUY the 2012 January $65 calls (NFX1221A65)

- or -

BUY the 2013 January $70 calls (NFX1319A70)

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


New York Community Bancorp - NYB - close: 18.31

01/22 update: There is no change from my prior comments. 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.

Look for some movement this week. NYB is due to report earnings on Jan. 26th.

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


UnitedHealth Group, Inc. - UNH - close: 40.77

01/22 update: There is no change from my prior comments on 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.

Buy-the-Dip trigger: $36.50

BUY the 2012 January $40 calls (UNH1221A40)

- or -

BUY the 2013 January $40 calls (UNH1319A40)

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


Verizon Communications - VZ - close: $34.95

01/22 update: VZ is still correcting lower. There is no change from my earlier comments. We want to launch positions at $33.00 with a stop loss at $31.45. Keep your position size small to limit your risk. 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: 53.29

01/22 update: Shares of X are still correction lower. Nimble, short-term traders may want to buy puts now and target a drop toward $50 or $48. I am adjusting our entry point to buy the dip closer to the 200-dma. Instead of launching positions at $50.50 we'll move the trigger down to $48.50. Our stop will remain at $44.80. Keep your position size small to limit your risk. Our long-term targets are $64.75 and $74.75.

Buy-the-Dip trigger: $48.50

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