Editor's Note:

In addition to tonight's new candidates, here's a few more stocks I'm currently watching for potential trades: TGT, CRS, TJX, HUM, FAST, CERN. Some of them need to see a pull back first.

- James



New Watch List Entries

HSY - Hershey Co

KFT - Kraft Foods Inc

LVS - Las Vegas Sands Corp

VMW - VMware, Inc.


Active Watch List Candidates

BMC - BMC Software

IR - Ingersoll-Rand

LTD - Limited Brands Inc

KO - Coca-Cola Co

MOS - Mosaic Co.

ROST - Ross Stores

RRC - Range Resources


Dropped Watch List Entries

BMY & NVDA graduated to the play list. EXXI has been removed.



New Watch List Candidates:


Hershey Co. - HSY - close: 59.42

Company Info

HSY just posted its fifth gain in a row and closed at new multi-year highs. Investors are probably drawn to the 2.3% dividend yield and the relative lack of volatility in the stock. A breakout past potential round-number resistance at $60.00 could herald a new leg higher. Nimble traders may want to try and buy a dip in the $57-56 zone. I am suggesting we wait for a close over $60.00 and then initiate positions with a stop loss at $55.75.

trigger: A close over $60.00

BUY the 2012 Jan $65 call (HSY1221A65)

- or -

BUY the 2013 Jan $65 call (HSY1319A65)

Chart of HSY:

Originally listed on the Watch List: 09/17/11


Kraft Foods Inc. - KFT - close: 35.06

Company Info

KFT is a defensive stock. Shares have a long-term bullish trend and investors are probably drawn to the 3.3% dividend yield. KFT has consistently bounced from its rising 200-dma, which is currently near $33.00. I am suggesting a buy-the-dip entry point at $33.50 with a stop loss at $31.75.

NOTE: KFT is a very slow moving stock. It will take months to make any progress. Once a position is over readers may want to turn these into calendar spreads (a.k.a. vertical spreads).

Buy-the-Dip trigger: $33.50

BUY the 2013 Jan $35 call (KFT1319A35)

Chart of KFT:

Originally listed on the Watch List: 09/17/11


Las Vegas Sands - LVS - close: 47.46

Company Info

LVS has been trading sideways in a wide range for months. The short-term bullish trend of higher lows is suggesting the stock could see a breakout soon. Nimble traders may want to buy calls on a move over $49.00. I am suggesting we wait and buy calls only if LVS can close over $50.00. If triggered we'll use a stop loss at $44.75. Our first target is $59.00. FYI: The Point & Figure chart is bullish with a $60 target.

trigger: Close Over $50.00

BUY the 2012 Jan $55 call (LVS1221A55)

- or -

BUY the 2013 Jan $60 call (LVS1319A60)

Chart of LVS:

Originally listed on the Watch List: 09/17/11


VMware, Inc. - VMW - close: 93.59

Company Info

If investors can get past their recession fears then technology stocks will most likely see the biggest gains. The group has certainly performed well when the market is in rally mode. VMW could be an outperformer if stocks continue to melt higher. Currently VMW is trading near resistance at $95.00 and its 50 and 100-dma.

I am suggesting we buy calls when VMW hits $96.00 with a stop loss at $89.00. I do consider this an aggressive, higher-risk trade. The $100 level has been resistance in the past and could be resistance again. If we are triggered at $96.00 we want to keep our position size small. Our target is $119.50. NOTE: That's a lot of money to buy the 2013s. You may want to stick with the 2012s instead.

Breakout trigger: $96.00 (Small Positions)

BUY the 2012 $110 call (VMW1221A110)

- or -

BUY the 2013 $110 call (VMW1319A110)

Chart of VMW:

Originally listed on the Watch List: 09/17/11


Active Watch List Candidates:



BMC Software - BMC- close: 42.30

update 09/17: BMC displayed impressive relative strength with a rebound from $28 to over $42 last week. The move has created a bullish breakout from its trading range. We are adjusting our entry point strategy. I'm now suggesting a buy-the-dip entry point at $40.25 with a stop loss at $37.40 (under the September low). Our targets are $46.50 and 49.75.

Buy-the-Dip trigger: $40.25 *new trigger*

BUY the 2012 Jan $45 call (BMC1221A45)

- or -

BUY the 2013 Jan $45 call (BMC1319A45) 09/17 adjusted entry point to buy the dip at $40.25, stop 37.40
09/17 adjusted option strikes to 2012 and 2013 Jan $45s.

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


Energy XXI - EXXI - close: 25.14

update 09/17: EXXI is not cooperating so I am removing it from the play list. Shares continue to churn sideways inside a neutral pennant formation. Our buy-the-dip entry point has not been hit at $20.50. More aggressive traders may want to consider buying a breakout or a close over $26.50 or $27.00 instead. I am removing EXXI from the watch list and will place it back on my radar screen to keep an eye on it.

Trade Never Opened

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


Ingersoll-Rand - IR - close: 35.70

update 09/17: IR displayed relative strength last week and the stock has broken out above resistance at the $35 level and its 50-dma. Aggressive traders may want to buy calls now. I'm concerned the wider market is a bit overbought and due for a pull back. Thus I'd still rather buy a dip. We'll adjust our entry point strategy on IR to buy a dip at $33.00 with a stop loss at $31.00. A more aggressive stop loss would be placing it under the $30.00 level instead. I've updated the 2013 option strike to the $40s.

We do want to keep our position size small to limit our risk.

Buy-the-Dip trigger: $33.00 *new trigger*

BUY the 2012 Jan $35 call (IR1221A35)

- or -

BUY the 2013 Jan $40 call (IR1319A40)

09/17 adjusted strategy to buy the dip at $33.00, stop loss @ 31.00, new option strikes as well

Originally listed on the Watch List: 09/03/11


Coca-Cola Co - KO - close: 71.23

update 09/17: KO rallied toward its 2011 highs and closed near multi-year highs as well. More aggressive traders may want to buy calls now. I am still expecting a market pull back. We will adjust our buy-the-dip entry point to buy calls at $67.00 with a stop loss at $63.49, which is under the August lows. I've adjusted our 2013 strike to the $75s.

Remember, this is a slow-moving stock. It's going to take months for KO to make significant headway but the trend is up. Our plan is to keep positions small to limit our risk.

Buy-the-Dip trigger: $67.00 *new trigger*

BUY the 2012 Jan. $70 call (KO1221A70)

- or -

BUY the 2013 Jan. $75 call (KO1319A75)

09/17/11 stocks are showing strength. New entry point at $67.00, stop at $63.49
09/10/11 adjusted entry point to $64.50, stop loss to $61.45
09/03 adjusting buy-the-dip trigger to $66.50
09/03 removing the secondary entry point
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


Limited Brands, Inc. - LTD - close: 40.28

update 09/17: LTD delivered a strong week with a rally from its Monday morning lows near $36.00 to close over round-number resistance at $40.00. We do not want to chase it here but we do need to adjust our strategy. I am moving our buy-the-dip entry point to $37.50 with a stop loss at $34.40. I've updated our option strikes to the 2012 Jan $40 and 2013 Jan $45s.

Buy-the-Dip trigger: $37.50 *new trigger*

BUY the 2012 Jan $40 call (LTD1221A40)

- or -

BUY the 2013 Jan $45 call (LTD1319A45)

09/17/11 new trigger @ 37.50, updated option strikes.

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


Mosaic Co. - MOS - close: 70.99

update 09/17: MOS spent another week consolidating sideways. The stock was essentially pinned to the $70.00 level for September option expiration. The stock has been trading in a neutral pennant formation of lower highs and higher lows. I would expect a breakout soon. Nimble traders may want to buy short-term calls on a move over $72.50 or its 200-dma and buy short-term puts on a breakdown under $68.00.

The newsletter's strategy has not changed. We are waiting for a breakout over $75.00 with a trigger to buy calls at $75.50.

NOTE: MOS has earnings on Sept. 28th. Conservative traders will not want to open positions prior to earnings. Wait to see the post-earnings move first.

Earlier Comments:
MOS has rallied toward resistance in the $74-75 area. I am suggesting we buy calls if MOS hits $75.50 with a stop loss at $67.45. It's a wide stop but MOS can be a volatile stock. We'll use the $80/$85 calls. FYI: Just in case MOS retreats lower then we'll be watching for a possible entry point on a dip in the $60-55 area instead (and we'll use lower option strikes).

Buy-the-breakout trigger: $75.50

BUY the 2012 Jan $80 call (MOS1221A80)

- or -

BUY the 2013 Jan $85 call (MOS1319A85)

Originally listed on the Watch List: 09/03/11


Ross Stores Inc. - ROST - close: 80.67

update 09/17: ROST has been showing impressive relative strength. We need to adjust our entry point strategy. I am moving our buy-the-dip entry point trigger to $76.50 and our stop loss to $71.40. I've updated our option strikes as well.

Buy-the-Dip trigger: $76.50 *new trigger*

BUY the 2012 Jan $80 call (ROST1221A80)

- or -

BUY the 2013 Jan $85 call (ROST1319A85)

09/17/11 new trigger at $76.50, stop @ 71.40, new strikes.

Originally listed on the Watch List: 09/10/11


Range Resources Corp. - RRC - close: 63.44

update 09/17: RRC spent the week consolidating sideways. We are adjusting our entry point strategy here too. I am moving our buy-the-dip entry to $57.00 with a stop loss at $53.45. I've adjusted our options to the 2012 Jan $60s and the 2013 Jan $65s.

Readers may want to consider an alternative and wait for a close over $67.00 instead.

Buy-the-Dip trigger: $57.00 *new trigger*

BUY the 2012 Jan $60 call (RRC1221A60)

- or -

BUY the 2013 Jan $65 call (RRC1319A65)

09/17/11 new trigger at $57.00, stop 53.45

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