Editor's Note:

I have adjusted a few of our entry triggers below.



New Watch List Entries

CREE - Cree, Inc.

SCCO - Southern Copper


Active Watch List Candidates

CNX - CONSOL Energy

DE - Deere & Co.

FTR - Frontier Telecom

GE - General Electric

GLD - Gold ETF

HAS - Hasbro Inc.

LLL - L-3 Communications

SWN - Southwestern Energy


Dropped Watch List Entries

None



New Watch List Candidates:


Cree, Inc. - CREE - close: 29.89

Company Info

CREE is in the semiconductor industry. The company reported earnings a couple of weeks ago. The better than expected results fueled the gap higher. Now CREE is testing round-number resistance at $30.00. If this strength continues we want to hop on board.

I am suggesting we wait for CREE to close over $30.25 and then buy calls the next day. If that occurs we will start with a stop loss at $27.45. More aggressive traders may want to put their stop below the bottom of the Oct. 17th gap, under the $26.00 level instead. Our long-term target is $39.00.

Breakout trigger: Wait for a close over $30.25 (stop 27.45)

BUY the 2014 Jan $35 call (CREE1418a35) current ask $3.75

Chart of CREE:

Originally listed on the Watch List: 10/20/12


Southern Copper Corp - SCCO - close: 37.97

Company Info

SCCO is an American company that operates mines in Chile, Mexico, and Peru. Its major product is copper ore but SCCO produces other metals as well. While the company's latest earnings report wasn't that great, a large part of the drop in income was due to higher legal fees. Those fees should subside now that a shareholder lawsuit is over regarding are recent merger.

Technically shares of SCCO have been showing significant relative strength with gains in four of the last five weeks. SCCO closed at new 52-week highs. Aggressive traders may want to buy calls now. I am suggesting we buy a dip at $36.50 with a stop loss at $31.95. Our long-term target is $44.75.

We want to keep our position size small to start.

Buy-the-Dip trigger: $36.50 (stop 31.95, small positions)

BUY the 2014 Jan $40 call (SCCO1418a40) current ask $2.20

Chart of SCCO:

Originally listed on the Watch List: 10/20/12


Active Watch List Candidates:



CONSOL Energy Inc. - CNX - close: 35.19

Comments:
10/27/12: CNX only lost two cents for the week but that doesn't describe the swings this stock saw over the last five days. The breakout past $36 failed and shares traded under $34.00 on Thursday. I still think shares will see a small correction lower. We are adjusting our buy-the-dip trigger down from $33.50 to $33.00.

We want to keep our position size small. Our long-term target is $42.50. The Point & Figure chart for CNX is bullish with a long-term $47 target.

Buy-the-Dip trigger: $33.00 (Small Positions, stop 29.90)

BUY the 2014 Jan $40 call (CNX1418a40)

10/27/12 adjust the trigger down to $33.00

Originally listed on the Watch List: 10/13/12


Deere & Co. - DE - close: 85.47

Comments:
10/27/12: DE almost hit our buy-the-dip trigger on Thursday. The intraday low was $83.62. The following bounce and Friday's show of relative strength actually looks like a potential entry point. I would be tempted to buy calls here but the broad market indices still look weak. We'll keep our strategy unchanged for now.

Earlier Comments:
I am adjusting our buy-the-dip trigger up to $83.50 and we'll move the stop loss to $79.45. I would start with small positions to limit our risk. I am adjusting our target to $97.50.

FYI: DE is not scheduled to report earnings until late November.

Buy-the-Dip trigger: $83.50 (stop loss 79.45) *Small Positions*

BUY the 2014 Jan $90 call (DE1418a90)

10/20/12 adjust the buy-the-dip trigger to $83.50, move the stop to $79.45, move the target to $97.50
09/29/12 adjust our entry point to buy a dip at $79.00, adjust the stop loss to $74.90

Originally listed on the Watch List: 09/15/12


Frontier Comm. - FTR - close: 4.74

Comments:
10/27/12: FTR lost two cents for the week. Traders bought the dip near support at $4.50 but FTR seems to have developed a bearish trend of lower highs. The company is due to report earnings on November 6th. If FTR doesn't see a move after the earnings report I'll probably remove it as a candidate.

Earlier Comments:
I am suggesting we buy calls after FTR closes above $5.20. Wait for FTR to close above our trigger and buy calls the next day with a stop at $4.65. Our long-term target is $6.90. More aggressive traders could aim higher.

Breakout trigger: Wait for a close over $5.20 (stop 4.65)

BUY the 2014 Jan $5 call (FTR1418a5)

Originally listed on the Watch List: 09/29/12


General Electric - GE - close: 21.11

Comments:
10/27/12: Hmm... GE almost hit our entry point at $21.00 this past week. The intraday low on Thursday was $21.03. There was no follow through on the bounce off Thursday's low. Combined with weakness in the major indices I am starting to think the correction in GE is not done yet.

Since our trade is not open yet I am moving our buy-the-dip trigger down to $20.50. Our long-term target is $27.50.

Buy-the-Dip trigger: $20.50 (stop 19.45)

BUY the 2014 Jan $25 call (GE1418a25)

10/27/12 move the buy-the-dip trigger down to $20.50
10/20/12 adjust the buy-the-dip trigger to $21.00 and our stop to $19.45

Originally listed on the Watch List: 09/22/12


SPDR Gold ETF - GLD - close: 165.93

Comments:
10/27/12: The GLD just produced its third weekly decline in a row. Yet this ETF only lost about a dollar for the week. Traders bought the dip below $165.00. The short-term trend lower is still in effect. Plus the U.S. dollar looks poised to bounce and a rebound in the dollar should be bearish for commodities, including gold prices.

Currently the simple 200-dma is at $161.50. I am moving our buy-the-dip trigger to $162.00 and moving our stop loss to $154.90.

Plan to exit the 2013 June calls at $174.50. Exit the 2014 calls in the $185-200 range.

Buy-the-Dip trigger: $162.00 (stop loss @ 154.90)

BUY the 2013 Jun $175 call (GLD1322a175)

- or -

BUY the 2014 Jan $200 call (GLD1418a200)

10/27/12 adjust the entry trigger to $162.00 and the stop to $154.90
10/20/12 adjust the buy-the-dip trigger to $163.00, stop to $157.75
adjust the 2013 call from Jan. $175 to June $175
09/15/12 adjust the trigger to $165.50, stop to $159.00.
09/08/12 adjust the buy-the-dip trigger to $164.00 (up from $162)

Originally listed on the Watch List: 09/01/12


Hasbro Inc. - HAS - close: 36.35

Comments:
10/27/12: Ouch! HAS spiked to resistance near $40.00 on Monday, Oct. 22nd and immediately reversed. The volatility was a reaction to the company's earnings report. HAS beat earnings estimates by four cents but missed the revenue number. Shares have since broken down to new three-month lows. HAS is now testing technical support near its 200-dma. If shares do not see a rebound soon I'll likely drop it as a candidate.

Earlier Comments:
I am suggesting we wait for HAS to close over $40.25 and open bullish positions the next day with a stop loss at $37.25. Our long-term target is $45.00.

FYI: HAS is due to report earnings on Oct. 22nd.

Breakout trigger: Wait for a close over $40.25 (stop 37.25)

BUY the 2014 Jan $40 call (HAS1418a40)

Originally listed on the Watch List: 10/20/12


L-3 Communications - LLL - close: 73.42

Comments:
10/27/12: LLL recovered from its Monday-Tuesday decline with traders buying the dip near short-term support at $72.00. Currently we are waiting for a breakout past resistance and LLL's earnings report could be the catalyst for that move. I am adjusting our stop loss, if the trade is trigger, to $71.85.

I am suggesting we buy calls the day after LLL closes above $75.50. Our long-term target is $85.00. The Point & Figure chart for LLL is bullish with an $85 target. FYI: LLL is scheduled to report earnings on Oct. 30th.

NOTE: We will not open positions if LLL gaps open above $76.50 or sees a one-day surge where the stock closes above $76.50. This is an effort to try to avoid any post-earnings volatility.

Breakout trigger: Wait for a close over $75.50 (stop 71.85)

BUY the 2014 Jan $80 call (1418a80)

Originally listed on the Watch List: 10/20/12


Southwestern Energy - SWN - close: 34.14

Comments:
10/27/12: Profit taking has pulled SWN down to technical support near its 50-dma. It looks like investors are starting to buy this dip but I would not launch new positions yet. SWN is scheduled to report earnings on November 1st. The company's results will likely launch the stock one direction or the other.

Earlier Comments:
I am suggesting we wait for SWN to close over $37.00 and then buy calls the next day with a stop loss at $33.40. Our long-term target is $44.00. The Point & Figure chart for SWN is bullish with a long-term $51 target.

Breakout trigger: Wait for a close above $37.00 (stop 33.40)

BUY the 2014 Jan $40 call (SWN1418a40)

Originally listed on the Watch List: 10/13/12