Editor's Note:

I had written a bullish trade set up to buy a dip on BIDU given the stock's long-term up trend. Another dip near BIDU's 200-dma could be used as an entry point. Unfortunately, the options on BIDU are just way too pricey.

In addition to tonight's new candidates, here is a list of stocks I'm watching as potential bullish trading ideas:

WPI, DLTR, COST, NKE, ROST, FSLR, CRS and SPX.

On tonight's watch list you'll notice that we've tweaked some of our entry points.

- James



New Watch List Entries

EXXI - Energy XXI

LTD - Limited Brands Inc


Active Watch List Candidates

BMC - BMC Software

ESV - Ensco Plc.

KO - Coca-Cola Co.

MMR - McMoRan Exploration

RRC - Range Resources

XOP - S&P Oil & Gas ETF


Dropped Watch List Entries

None.



New Watch List Candidates:


Energy XXI - EXXI - close: 24.46

Company Info

We like the fundamental story behind EXXI and some of its recent joint ventures with MMR. The two companies both seem poised for big growth and profits. The sell-off in EXXI is overdone but that doesn't mean it's finished. Currently EXXI is consolidating sideways. Given our long-term timeframe readers may want to launch positions now. I am suggesting a buy-the-dip entry point at $21.50, near its August lows. If triggered we'll use a stop loss at $19.45. I do want to warn you that EXXI can be a volatile stock so keep your position size small.

FYI: EXXI does have 2013 January calls but the spreads are way too wide.

Buy-the-Dip trigger: $21.50

BUY the 2012 Jan $25 call (EXXI1221A25)

Chart of EXXI:

Originally listed on the Watch List: 08/27/11


Limited Brands, Inc. - LTD - close: 36.41

Company Info

Depending on what time frame you look at LTD's chart you'll either see a bullish trend or a bearish trend. On a short-term basis over the last few days the stock is trending higher and Friday's breakout over $36 is bullish. Pulling back to look at the last few months and LTD has a bearish trend of lower highs and lower lows. Step back even further and look at a three-year weekly chart you'll see that LTD still has a long-term bullish trend of higher lows.

Aggressive traders may want to consider buying calls now given the long term trend and the recent rebound. However, we face a perilous week with a parade of economic headlines and the jobs report on Friday. We don't know if stocks will swoon back to their lows on negative headlines.

I am suggesting a buy-the-dip trigger at $32.50 with a stop loss at $29.45. If we do not see a pull back in the next couple of weeks we will re-evaluate our entry point strategy.

Buy-the-Dip trigger: $32.50

BUY the 2012 Jan $35 call (LTD1221A35)

- or -

BUY the 2013 Jan $40 call (LTD1319A40)

Chart of LTD:

Originally listed on the Watch List: 08/27/11


Active Watch List Candidates:



BMC Software - BMC- close: 39.57

update 08/27: BMC is up about two dollars for the week. Yet in spite of the bounce BMC has not yet rallied past resistance near $40.00. This stock is still very, very oversold from its July-August sell-off. Yet I'm not convinced the worst is over yet. Tonight we're going to keep buy-the-dip entry point but we'll adjust it to $35.50 with a stop loss at $33.75. As an alternative readers may want to consider bullish positions if BMC can close above the $40.00 or $41.50 levels.

Buy-the-Dip trigger: $35.50

BUY the 2012 Jan $40 call (BMC1221A40)

- or -

BUY the 2013 Jan $40 call (BMC1319A40)

Originally listed on the Watch List: 08/20/11


Ensco Plc. - ESV - close: 46.22

update 08/27: ESV is up over +9% for the week but most of that was on Friday's +6.5% gain. I did not see any specific news behind ESV's relative strength on Friday. Did Bernanke say something specific on Friday that would drive investors to high-paying dividend stocks like ESV? I don't believe he did but clearly investors were in a buying mood. I certainly don't want to chase it today. We have a headline heavy week in front of us. Tonight we'll adjust our buy-the-dip entry point to $40.50. More aggressive traders may want to buy a dip near $42.50 instead. If we are triggered at $40.50 we'll use a stop loss at $38.40. We do want to keep our position size small to limit our risk.

buy-the-dip at $40.50

BUY the 2012 Jan $45 call (ESV1221A45)

- or -

BUY the 2013 Jan $45 call (ESV1319A45)

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


Coca-Cola Co - KO - close: 68.50

update 08/27: Gain in KO last week were pretty mild. Shares essentially churned sideways between short-term support near $67.00 and resistance at $70.00. I do not see many changes from my prior comments. I am suggesting a buy-the-dip entry point at $65.00. Cautious traders could wait for a dip closer to $64.00. If we are triggered at $65.00 we'll use a stop loss at $63.40, which is under the August low.

Please note that we'll add an alternative entry point. If KO can close over $70.50 then we'll adjust our strategy to buy calls the following session and we'll buy the 2012 Jan $75 or 2013 Jan $75 calls with a stop at $66.40 instead.

Keep positions small.

Buy-the-Dip trigger: $65.00

BUY the 2012 Jan. $70 call (KO1221A70)

- or -

BUY the 2013 Jan. $70 call (KO1319A70)

08/27 Adding a secondary entry point to buy $75 calls if KO can close over $70.50. stop loss at $66.40.

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


McMoRan Exploration Co. - MMR - close: 11.79

update 08/27: MMR did not truly participate in the market's big bounce this past week. That alone is a worrisome sign. Shares churned sideways in the $11.00-12.00 range all week. Aggressive traders may want to consider bullish positions if we see MMR close over $12.00 or the $12.25 levels. I am still suggesting we wait and buy a dip at $10.25 instead. If triggered at $10.25 we'll use a stop loss at $9.40. We want to keep our position size small.

Buy the dip at $10.25

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


Range Resources Corp. - RRC - close: 59.76

update 08/27: I don't see any big changes from my prior comments on RRC. The last four weeks have been very volatile. You'll notice that shares are trading in a neutral pattern of higher lows and lower highs. Currently we have a buy-the-dip entry point at $52.00 but to get there RRC would have to produce a bearish breakdown from this neutral pattern. The reason we wanted to buy a dip was that RRC has significant support in the $52-50 zone.

Tonight we are adjusting our buy-the-dip trigger to $52.50 to stay just above the simple 200-dma. If triggered at $52.50 we'll use a stop loss at $49.45. As an alternative readers may want to consider buying a breakout from the current neutral pattern on a move above or a close above $63.00 instead.

Buy-the-Dip trigger: $52.50

BUY the 2012 Jan $60 call (RRC1221A60)

- or -

BUY the 2013 Jan $60 call (RRC1319A60)

Originally listed on the Watch List: 08/20/11


S&P Oil & Gas ETF - XOP - close: 50.44

update 08/27: The XOP delivered +3% gain for the week but shares are still struggling with resistance in the $50-51 area. I suspect we could see another dip toward last week's lows. We will adjust our buy-the-dip entry point to buy calls at $46.50 and use a stop loss at $44.75. Keep positions small.

Buy-the-Dip trigger: $46.50 - new trigger -

BUY the 2012 Jan. $50 call (XOP1221A50)

- or -

BUY the 2013 Jan. $60 call (XOP1319A60)

Originally listed on the Watch List: 08/20/11