Editor's Note:

In addition to BCR in tonight's watch list, readers may want to keep an eye on the healthcare sector as an area that might offer entry points as the market's correction continues. Investors might want to check out the UNG natural gas ETF as well. The UNG has been an underperforming equity for years but it looks like it may have finally found a bottom.



New Watch List Entries

BCR - C.R.Bard Inc.


Active Watch List Candidates

AGN - Allergan Inc.

AXP - American Express Co

HSY - Hershey Co.

MCD - McDonald's Corp.

PEP - Pepsico

T - AT&T Inc.

V - Visa


Dropped Watch List Entries

ZMH has graduated to the play list. HOT has been removed.



New Watch List Candidates:


C.R.Bard Inc. - BCR - close: 108.98 change: -1.51

Company Info

BCR is a healthcare company that makes medical devices. The stock hit new all-time highs back in May. Since then shares have produced a bearish trend of lower highs and lower lows but the profit taking has actually been relatively mild. While the relative strength is encouraging we don't want to launch positions now. It seems the market is headed for a deeper correction, which will weigh on shares of BCR. Aggressive traders might want to buy a dip near $105. I am suggesting we buy long-term calls on a dip at $101.00. If triggered we'll use a stop loss at $97.75. Buy-the-Dip trigger: $101.00

BUY the 2012 Jan. $105 (BCR1221A105)

Chart of BCR:

Originally listed on the Watch List: 06/11/11


Active Watch List Candidates:



Allergan Inc. - AGN - close: 79.14

06/11 update: AGN slipped to a new five-week low and closed under technical support at its 50-dma on Friday. We are expecting a drop toward support near $75.00. More conservative traders may want to wait and see if shares dip toward their 200-dma instead before launching bullish positions.

I am suggesting we buy call LEAPS on a dip at $75.50 since a pull back to this level would not break the current up trend in AGN's long-term pattern. If triggered we'll use a stop loss at $71.40, which is under the 200-dma. Our long-term targets are $85 and $97.50. Buy-the-Dip trigger: $75.50

BUY the 2012 Jan $80 call (AGN1221A80)

- or -

BUY the 2013 Jan $85 call (AGN1319A85)

Originally listed on the Watch List: 06/04/11


American Express Co. - AXP - close: 47.74

06/11 update: AXP almost hit our buy-the-dip trigger on Friday. Financial stocks have continued to underperform but large cap stocks in the group saw a bounce on Friday afternoon. I am concerned that the market's sell-off is accelerating but we haven' yet seen a capitulation sort of sell-off yet. I am suggesting we alter our entry point strategy. Normally a dip $47.00 would look like a new entry point but I'm moving our buy-the-dip trigger down to $45.50 and we'll move our stop loss down to $42.90.

More conservative traders may just want to wait and see where AXP is trading at the end of June before considering new positions. Our long-term targets are $55 and $65. Buy-the-Dip trigger: $45.50 -- adjusted

BUY the 2012 Jan $50 call (AXP1221A50)

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BUY the 2013 Jan $50 call (AXP1319A50)

Originally listed on the Watch List: 05/21/11


Starwood Hotels & Resorts - HOT - close: 54.98

06/11 update: The action in HOT has turned increasingly bearish! This past week saw a breakdown under its 200-dma. Now HOT is testing support near $55.00 around the March lows. A breakdown here would look very bearish. Our plan was to buy calls when HOT closes above the $62 level. Since that possibility is growing more remote I am dropping HOT as a bullish candidate.

HOT has been removed as a candidate

Originally listed on the Watch List: 05/28/11


Hershey Co. - HSY - close: 53.92

06/11 update: HSY continues to trade with a bearish trend of lower highs. This is within the context of the larger up trend and thus far the pull back is just a normal correction. Broken resistance at $52.00 should be support. I am suggesting we launch bullish positions on a dip at $52.25. If triggered we'll use a stop loss at $48.75. Our long-term targets are $60 and $64.

Buy-the-Dip trigger: $52.25

BUY the 2012 $55 calls (HSY1221A55)

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BUY the 2013 $55 calls (HSY1319A55)

Originally listed on the Watch List: 04/02/11


McDonald's Corp. - MCD - close: 80.36

06/11 update: MCD spent the week bouncing along support near the $80 level. The company announced that their global same-store sales grew +3.1%. Long-term the trend is up but I'm expecting the correction to pull MCD toward $78.00 or the simple 200-dma. Currently our plan is to launch positions at $78.50. If triggered we'll use a stop loss at $75.75, under the simple 200-dma. Our long-term targets are $89 and $99. The P&F chart is suggesting a $113 target. Buy-the-Dip trigger: $78.50

BUY the 2012 Jan $80 call (MCD1221A80)

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BUY the 2013 Jan $85 call (MCD1319A85)

Originally listed on the Watch List: 05/21/11


Pepsico, Inc. - PEP - close: $68.69

06/11 update: Shares of PEP also spent the week churning the sideways. The bounce attempt on Thursday failed at resistance near $70 and its 30-dma. Traders have been buying the dips near PEP's 50-dma but I'm expecting this level to fail. Right now our plan is to launch bullish positions on a dip at $67.00. More conservative traders could wait for a dip or a bounce near the 200-dma closer to the $66.00 level instead. If we are triggered at $67.00 we'll use a stop loss at $64.75. Our targets are $75 and $79. Buy-the-Dip trigger: $67.00

BUY the 2012 Jan. $70 call (PEP1221A70)

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BUY the 2013 Jan. $70 call (PEP1319A70)

Originally listed on the Watch List: 05/14/11


AT&T - T - close: 30.34

06/11 update: AT&T spent most of the week hovering inside the $30.20-30.60 area. I don't see any changes from my prior comments. I am suggesting we wait for a dip closer to $29 and its 200-dma. We have a buy-the-dip entry point at $29.25. Let's keep our position size small to limit our risk.

If triggered at $29.25 our stop will be $27.90. Our long-term target is the $36-40 zone. AT&T doesn't move very fast so we will need lots of patience.

Buy-the-Dip trigger: $29.25 (small positions)

BUY the 2012 January $30.00 call (T1221A30)

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BUY the 2013 January $30.00 call (T1319A30)

Originally listed on the Watch List: 04/09/11


Visa Inc. - V - close: 74.69

06/11 update: It was a volatile week for Visa, especially on Wednesday. The U.S. Senate voted down the Tester amendment, which would have delayed news rules on interchange fees that credit card issues charge to merchants. This past week has seen Visa breakdown under its 50-dma, its 100-dma, its exponential 200-dma. Now shares are sitting on their simple 200-dma. If this stock does not bounce this week we'll drop it as a candidate. Currently the plan is to launch bullish positions when Visa closes above the $82.50 mark.

In the news last week Visa announced it was buying the South African company Fundamo for $110 million. This increases Visa's footprint in the mobile payments business.

Breakout trigger: wait for a close over $82.50

BUY the 2012 $85 call (V1221A85)

- or -

BUY the 2013 $90 call (V1319A90)

Originally listed on the Watch List: 06/04/11