Editor's Note:

In addition to tonight's new Watch List candidates I'm providing a list of stocks on our radar screen:

ATI, FLR, PH, TIE, FWLT, BHI, EXXI, HP, SUN, SWN, WLL, XOP, DRI, KFT, RRC, BMC, JOYG, FAST, AGN, PM, HNZ, EW, and XLE.

Plus, here are a few stocks that caught my eye but they don't have LEAPS:
CMP, XES, DRC, CRK, DRQ, BCR, AN, and HFC.

- James



New Watch List Entries

CLF - Cliffs Natural Resources

CRS - Carpenter Technology

EMN - Eastman Chemical Co

KO - Coca-Cola Co.

V - Visa Inc.


Active Watch List Candidates

EMC - EMC Corp

ESV - Ensco Plc.

MMR - McMoRan Exploration


Dropped Watch List Entries

None.



New Watch List Candidates:


Cliffs Natural Resources - CLF - close: 77.20

Company Info

The sell-off in CLF pushed shares from its highs near $100 toward its long-term trendline of higher lows near $70.00. The stock is already up more than +10% on the oversold bounce. We do not want to chase it here.

I am suggesting a buy-the-dip trigger at $74.00 to initiate long-term call option positions. If triggered we'll use a stop loss at $66.50. Our targets are $89.00 and $99.00.

Buy-the-Dip trigger: $74.00

BUY the 2012 Jan. $85 call (CLF1221A85)

- or -

BUY the 2013 Jan. $90 call (CLF1319A90)

Chart of CLF:

Originally listed on the Watch List: 08/13/11


Carpenter Technology - CRS - close: 48.98

Company Info

Many of the steel and iron stocks have suffered a lot but CRS has managed to maintain its long-term bullish up trend. The recent market sell-off pushed CRS to technical support at its 200-dma and price support near $45.00. The actual low last week was $43.64.

I am suggesting we buy calls on a dip at $46.00. If triggered we'll use a stop loss at $43.40. Our upside targets are $54.00 and $59.00.

NOTE: CRS does not have long-term LEAPS. We will have to use the 2012 March calls.

Buy-the-Dip trigger: $46.00

BUY the 2012 Mar. $50 call (CRS1217C50)

Chart of CRS:

Originally listed on the Watch List: 08/13/11


Eastman Chemical Co. - EMN - close: 84.95

Company Info

EMN is another industrial name that saw its stock plunge toward the long-term trendline of lower highs. The stock was downgraded to a "sell" on Friday but shares managed to rally anyway. I don't want to chase it after an $8 bounce. I am suggesting we buy calls on a dip at $81.00. If triggered we'll use a stop loss at $76.00 since the low last week was $76.88. Our upside target is $92.00 and $97.50. We may choose to exit ahead of EMN's stock split. NOTE: EMN is due for a 2-for-1 split on October 4, 2011.

Buy-the-Dip trigger: $81.00

BUY the 2012 Jan. $90 call (EMN1221A90)

Chart of EMN:

Originally listed on the Watch List: 08/13/11


Coca-Cola Co - KO - close: 67.14

Company Info

KO was on our play list last week but the market volatility pushed it under support and hit our stop loss. I still think KO works as a strong defensive name in an uncertain market. Instead of buying calls now I think we'll get a chance to buy it a little bit cheaper. I am suggesting a buy-the-dip entry point at $65.00 with a stop loss at $63.40. The low last week was $63.59.

Buy-the-Dip trigger: $65.00

BUY the 2012 Jan. $70 call (KO1221A70)

- or -

BUY the 2013 Jan. $70 call (KO1319A70)

Chart of KO:

Originally listed on the Watch List: 08/13/11


Visa Inc. - V - close: 83.83

Company Info

Shares of Visa (V) and Mastercard (MA) have held up pretty well as Wall Street adjusts to a new future with the Durbin amendment. You can see the big spike in both V and MA in late June. The feds released their final rule on the Durbin amendment that day. Not only was the news better than expected but it removed a big cloud of uncertainty regarding the future for these two stocks. Both V and MA should benefit from a global trend of consumers using debit and credit cards as their primary form of payment.

Aggressive traders could buy calls on Visa right now. I suspect we may get a lower entry point. I am suggesting a buy-the-dip entry at $80.00. Cautious traders could look for another dip to the 200-dma instead. The long-term trend of lower highs that goes back to early 2009 should be support near the $75.00 area. If triggered at $80.00 we'll use a stop loss at $74.90. Our upside targets are $94.00 and $99.00.

Buy-the-Dip trigger: $80.00

BUY the 2012 Jan $90 call (V1221A90)

- or -

BUY the 2013 Jan $100 call (V1319A100)

Chart of V:

Originally listed on the Watch List: 08/13/11


Active Watch List Candidates:



EMC Corp. - EMC - close: 23.14

08/13 update: EMC fell to new ten-month lows last week with shares hitting $21.40 intraday on Tuesday. The oversold bounce stalled at its 10-dma. on Friday morning. I am concerned that shares have broken below their long-term trendline of higher lows. Aggressive traders might want to buy long-term calls now. If shares can hold above the $22 level for a couple of weeks then we might consider new positions in this area. I'm concerned the sell-off may not be done yet. Nimble traders could try launching positions on another dip near $21.50ish. I am setting our buy-the-dip entry point at $20.25 since the $20.00 level should be significant support. If triggered at $20.25 we'll use a stop loss at $18.90.

The option strikes have been updated below.

buy the dip at $20.25

BUY the 2012 Jan $20 call (EMC1221A20)

- or -

BUY the 2013 Jan $25 call (EMC1319A25)

Originally listed on the Watch List: 07/23/11


Ensco Plc. - ESV - close: 46.79

08/13 update: Last Monday was an ugly, ugly day with a drop from $45.58 the previous Friday to an intraday low of $39.51. ESV closed at $40.42 on Aug. 8th. The $40 level proved to be support and ESV was rebounding higher the rest of the week. Now the bounce has stalled at its 10-dma, the first level of technical resistance. Coincidentally the rebound has also stalled at the 50% retracement of the $54-40 sell-off. The $40 level has been significant support and resistance for ESV over the last few years. There are some analysts expecting that the market might retest its lows. If that occurs we want to be ready to take advantage of the weakness in ESV.

I am suggesting a buy-the-dip entry point at $41.50. If triggered we'll use a stop loss at $38.95. We do want to keep our position size small to limit our risk.

I have updated our option strikes below.

buy-the-dip at $41.50

BUY the 2012 Jan $45 call (ESV1221A45)

- or -

BUY the 2013 Jan $50 call (ESV1319A50)

Originally listed on the Watch List: 07/30/11


McMoRan Exploration Co. - MMR - close: 13.39

08/13 update: MMR hit a new multi-month low of $11.45 on Tuesday. It seemed like the stock was trying to hold support near $12.00 most of the week. Unfortunately the oversold bounce has stalled near new overhead resistance at old support near $14.00 and its 10-dma. I am not convinced the correction is over. Looking at the long-term chart for MMR the $10.00 level has been significant support and resistance in the past. I am setting our buy-the-dip entry point at $10.50 with a stop loss at $9.40. If we do not see MMR breakdown to new lows then we'll reconsider buying calls near the $12 area if it proves to hold up as support.

The option strikes have been updated below.

Buy the dip at $10.50

BUY the 2012 Feb $12 call (MMR1218B12) -Februarys-

- or -

BUY the 2013 Jan $15 call (MMR1319A15)

Originally listed on the Watch List: 07/23/11