Editor's Note:

In addition to tonight's new watch list candidates, these stocks caught my eye: CROX, TDC, RL, ALXN

CROX - look for a breakout past $29.00

TDC - look for a rally past resistance at $55.00

RL - shares look like a buy right now but the options are very, very expensive.

ALXN - I don't want to chase it here. Wait for a dip, either near $60 or near the $57.50 area.

- James



New Watch List Entries

AGN - Allergan

PSMT - PriceSmart

TJX - TJX Cos. Inc.


Active Watch List Candidates

HSY - Hershey Co

LTD - Limited Brands Inc

LVS - Las Vegas Sands Corp

ROST - Ross Stores

RRC - Range Resources

VMW - VMware, Inc.


Dropped Watch List Entries

BMC, IR, KFT, and KO all jumped to the play list last week. MOS was removed as a candidate.



New Watch List Candidates:


Allergan Inc. - AGN - close: 82.12

Company Info

AGN is a healthcare stock. Traders bought the dip near its 50-dma last week. Friday's bounce puts it less than four points away from a new all-time high. I am suggesting we open bullish positions if AGN can close over $85.50. If triggered we'll use a stop loss at $79.45. Our long-term target is $99.00.

NOTE: Option spreads are wide for these LEAPS. We want to keep our position size pretty small to limit our risk.

Wait for a close over $85.50

BUY the 2013 Jan $100 call (AGN1319A100)

Chart of AGN:

Originally listed on the Watch List: 09/24/11


PriceSmart Inc. - PSMT - close: 68.28

Company Info

PSMT has been outperforming the market for weeks. Shares finally succumbed to some profit taking this past week. If the pull back continues we want to be ready to buy the dip at $61.00. If triggered at $61.00 we'll use a stop loss at $57.75. Our long-term targets are $74.00 and $84.00 but we're only using the 2012 January calls so $84 might be a bit optimistic.

Buy-the-Dip trigger: $61.00

BUY the 2012 Jan $70 call (PSMT1221A70)

Chart of PSMT:

Originally listed on the Watch List: 09/24/11


TJX Cos. Inc. - TJX - close: 56.57

Company Info

If the S&P 500 index looked healthier I would seriously consider buying calls on TJ Maxx right now. Unfortunately, the market is at support and it could go either way. If stocks break down further then we could see TJX retest support near its rising 200-dma. Should that happen then we want to be ready.

I am suggesting a buy-the-dip trigger at $52.00 with a stop loss at $49.40.

Buy-the-Dip trigger: $52.00

BUY the 2013 Jan $60 call (TJX1319A60)

- or -

BUY the 2014 Jan $60 call (TJX1418a60)

Chart of TJX:

Originally listed on the Watch List: 09/24/11


Active Watch List Candidates:



Hershey Co. - HSY - close: 59.08

update 09/24: HSY weathered the week's volatility pretty well. Traders bought the dip near $57.00 and Friday saw HSY outperform the major indices. Our plan is unchanged. We want to wait for a close over resistance at $60.00 and then initiate positions. We'll start 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)

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


Limited Brands, Inc. - LTD - close: 40.37

update 09/24: LTD managed to end the week with a gain. Traders bought the dip on Thursday at $38.00 near its 100-dma. If you think the major indices will hold their August lows then this is an entry point but I would use a tight stop loss. I am concerned that the sell-off is not over yet. We will adjust our entry point again and move the buy-the-dip trigger back down to $35.50. This will allow us to buy a dip near technical support at the 200-dma. If triggered we'll use a stop loss at $31.35.

Buy-the-Dip trigger: $35.50 *new trigger*

BUY the 2013 Jan $40 call (LTD1319A40)

09/24/11 new trigger @ 35.50, updated 2013 option strike
09/17/11 new trigger @ 37.50, updated option strikes.

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


Las Vegas Sands - LVS - close: 44.38

update 09/24: LVS flirted with a breakout over $50.00 but it never closed over $50.00. Thus our trade never opened. The market's widespread sell-off pulled LVS back down toward its 200-dma and its September lows near $44. We are not changing our strategy. We'll continue to wait for a 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 2013 Jan $60 call (LVS1319A60)

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


Mosaic Co. - MOS - close: 57.70

update 09/24: Congratulations if you bought the short-term puts. MOS delivered a terrible week with five down days in a row. The stock collapsed from $70 to hit $56.52 on Friday morning. Last week I suggested nimble traders buy short-term puts on a drop under $68.00. If you did buy puts, I'd take profits now. The August lows could hold.

Normally news that a stock is getting added to the S&P 500 index is bullish. Yet MOS did not see a very positive reaction. It was announced on Thursday evening that MOS would be added to the index, which explains the massive volume on Friday.

Previously I suggested that we'd look for an alternative entry point on a dip into the $60.00-55.00 zone. Well the dip is here but I'm not that enthusiastic about buying calls. The company pre-announced its earnings results on Friday morning and the results were disappointing, which explains the lack of a bounce on the S&P news. The combination of negative earnings plus a stock market clinging to support is not encouraging.

I am going to remove MOS as a candidate tonight. Nimble traders might want to consider buying a dip or a bounce near $55.00 and just try and use a tight stop loss.

Buy-the-breakout trigger: $75.50

Trade Never Opened!

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


Ross Stores Inc. - ROST - close: 79.53

update 09/24: Hmm... ROST held up pretty well last week. On a short-term basis it looks like a buy. Traders bought the dip twice on Thursday near $77.25. Nimble traders could buy calls here with a stop loss near $77.00 or under $76.00. Yet longer-term I'm more cautious on an entry point. The market looks vulnerable. The simple 200-dma is near $73.00. I am adjusting our trigger again. We'll move the buy-the-dip trigger down to $73.00 and move our stop loss down to $69.50. More aggressive traders will want their stop under the August low instead.

Buy-the-Dip trigger: $73.00 *new trigger*

BUY the 2013 Jan $85 call (ROST1319A85)

09/24/11 new trigger at $73.00, stop 69.50
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: 58.53

update 09/24: Wow! It was a very volatile week for RRC. Monday saw a spike over $70 on takeover speculation. Wednesday saw another spike, this time past $77 on takeover speculation. Yet Friday the stock collapsed on legal troubles brewing in the state of Pennsylvania over the Marcellus shale formation.

The low on Friday was $57.77. Given the relative weakness on Friday (-11.5%) I am adjusting our entry point. We will move the buy-the-dip entry point down to $52.50 and adjust our stop loss to $49.40. More aggressive traders may want to buy a dip near $55.00 instead.

Buy-the-Dip trigger: $52.50 *new trigger*

BUY the 2013 Jan $60 call (RRC1319A60) *new strike

09/24/11 new trigger at $52.50, stop 49.40
09/17/11 new trigger at $57.00, stop 53.45

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


VMware, Inc. - VMW - close: 85.60

update 09/24: Last week's drop under the 200-dma might be considered a bearish breakdown for VMW. Nimble traders might want to consider buying dips near the August lows around $77.00. At the moment, we are going to leave our entry point unchanged at $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 2013 $110 call (VMW1319A110)

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