Editor's Note:

The market looks weak here and could see further declines. I have adjusted a couple of our entry triggers in response.



New Watch List Entries

ADBE - Adobe Systems

RCL - Royal Caribbean Cruises


Active Watch List Candidates

CNX - CONSOL Energy

DE - Deere & Co.

GE - General Electric

GLD - Gold ETF

SCCO - Southern Copper

SWN - Southwestern Energy


Dropped Watch List Entries

CREE graduated to our play list.
FTR and HAS have been removed.
LLL has been moved to our new plays section tonight



New Watch List Candidates:


Adobe Systems - ADBE - close: 34.39

Company Info

ADBE is in the software industry. Shares appear to be building a major basing pattern with its sideways consolidation in the $30-35 zone over the last several months. A breakout higher could be the beginning of its next major up move.

I am suggesting we wait for ADBE to close over $35.25 and then buy calls the next day. Our long-term target is $44.00.

Breakout trigger: Wait for a close over $35.25 (stop @ 32.25)

BUY the 2014 Jan $40 call (ADBE1418a40) current ask $2.41

Chart of ADBE:

Originally listed on the Watch List: 11/03/12


Royal Caribbean Cruises - RCL - close: 34.74

Company Info

Normally when a company issues an earnings warning the stock goes down. Yet shares of RCL are hitting new 2012 highs. The company reported earnings back on October 25th. Wall Street was expecting a profit of $1.46 a share. RCL delivered $1.68. It was a strong beat but RCL then lowered their Q4 guidance. This should have sank the stock. Yet shares spiked higher most likely due to management's positive comments about their 2013 outlook. Even more impressive is that shares of RCL have been able to build on those gains.

The $35.00 level could be resistance and given the market's weakness I would not be surprised to see a little profit taking in RCL. I am suggesting we wait and buy calls on a dip at $32.25 with a stop loss at $29.25. Our long-term target is $39.50. More aggressive traders could aim higher. The Point & Figure chart is forecasting at $57 target.

Buy-the-Dip trigger: $32.25 (stop loss @ 29.25)

BUY the 2014 Jan $35 call (RCL1418a35) current ask $5.45

Chart of RCL:

Originally listed on the Watch List: 11/03/12


Active Watch List Candidates:



CONSOL Energy Inc. - CNX - close: 35.20

Comments:
11/03/12: CNX is virtually unchanged for the week. Unfortunately, Friday's session produced a bearish reversal just under the October high. This now looks like a bearish double top pattern. I am expecting a dip back toward the simple 200-dma. We will adjust our buy-the-dip trigger to $32.50 and our stop loss to $29.75.

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: $32.50 (Small Positions, stop 29.75)

BUY the 2014 Jan $40 call (CNX1418a40)

11/03/12 adjust the trigger down to $32.50, stop to $29.75
10/27/12 adjust the trigger down to $33.00

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


Deere & Co. - DE - close: 85.60

Comments:
11/03/12: DE eked out a small gain for the week yet Friday's session also looks like a bearish reversal pattern. If shares do correct DE will probably decline into the $82-80 zone. I am moving our trigger again, this time to $82.00.

Earlier Comments:
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: $82.00 (stop loss 79.45) *Small Positions*

BUY the 2014 Jan $90 call (DE1418a90)

11/03/12 DE appears to have reversed, use a trigger @ 82.00
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: 4.51

Comments:
11/03/12: Shares of FTR have continued to fail at technical resistance at its 300-dma. Now shares look poised to break support near $4.50. If that happens then FTR could easily see a correction down toward the $4.00 level. Nimble traders may want to consider short-term bearish trades. However, keep in mind that FTR is due to report earnings on Nov. 6th.

Given FTR's recent weakness it is unlikely that shares will hit our trigger (a close over $5.20) any time soon so I am removing FTR as a candidate.

Trade did not open.

11/03/12 removed FTR as a candidate. Trade did not open.

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


General Electric - GE - close: 21.31

Comments:
11/03/12: Traders bought the dip near $21.00 again but the bounce on Friday failed near its 10-dma. I am still expecting a correction into the $20.50-20.00 zone. Nimble traders may want to try and time an entry point on a dip near the simple 200-dma. 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: 162.60

Comments:
11/03/12: We have been expecting gold and the GLD to correct lower. Yet Friday's big drop was a surprise. The GLD gapped open lower and then plunged to a -2.0% decline thanks to a big rally in the U.S. dollar. The low on Friday for the GLD was $162.30 so our trade is not open yet. Given the bullish breakout in the dollar we could see gold's current correction lower last a while.

I am moving our buy-the-dip trigger to $160.00. More conservative traders could use a trigger near $158.00 instead. We'll adjust our stop loss to $154.40.

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

Buy-the-Dip trigger: $160.00 (stop loss @ 154.40)

BUY the 2013 Jun $175 call (GLD1322a175)

- or -

BUY the 2014 Jan $200 call (GLD1418a200)

11/03/12 Adjust the entry trigger down to $160.00 and the stop to $154.40
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: 35.58

Comments:
11/03/12: HAS has been underperforming since its earnings report and the stock is breaking down through multiple layers of support. It is unlikely that shares will hit our entry trigger (a close over $40.25) any time soon so I am dropping HAS as a watch list candidate.

Trade did not open.

11/03/12 remove HAS as a candidate. trade did not open.

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


Southern Copper Corp - SCCO - close: 38.54

Comments:
11/03/12: SCCO tagged new highs for 2012 this past week. I am still expecting a correction so we will wait for a pullback. 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)

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


Southwestern Energy - SWN - close: 35.91

Comments:
11/03/12: SWN displayed some relative strength this past week thanks in part to a better than expected earnings report. Shares have rallied back to their 2012 highs. We are waiting for a breakout past resistance.

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