New Watch List Entries
None, no new watch list candidates
Active Watch List Candidates
None, please see tonight's special edition of the watch list.
Dropped Watch List Entries
Visa (V) graduated to our play list.
New Watch List Candidates:
Tonight we are going to do the watch list a little different.
The U.S. market has produced a huge bounce off its Monday morning lows. The Wednesday-Thursday rally in the S&P 500 was the biggest two-day move since 2009.
That followed a six-day plunge pushed the U.S. market into correction territory.
Stocks went from oversold to overbought in about two days.
This kind of volatility is nearly impossible to trade.
I am encouraging investors to take a step back. Let the dust settle and then carefully select your targets. The next four to six weeks could be challenging for stocks.
I am not adding any new candidate to the watch list tonight.
However, I am listing several stocks on my radar screen and where I am looking at potential entry points. These are not official trade set ups just an early warning at some of the stocks I am watching.
ATVI - We recently had ATVI on our watch list and it graduated to an active play. Unfortunately last week's madness stopped us out and then ATVI reversed higher in a big way.
I don't want to chase it here. Wait for a pullback into the $26-28 area and then look for another rally higher as a potential entry point.
BCR - BCR corrected back toward support near $180 and bounced. I would not want to chase a nearly +10% rebound with shares just below resistance near $200. However, the long-term trend for BCR is very bullish. Another dip near $180 could be an entry point. If shares continue to show relative strength then a close above $202.00 might be an aggressive entry point.
CLX - The area to watch for CLX looks like the $114-115 area. A close above $115.00 might be a new bullish entry point.
FIS - This stock filled the gap from mid August and then bounced back to post a gain on the week. I would watch it for a close above the August highs (near $72.30) as a potential entry point. Alternatively another dip and bounce from the $66 area could be an entry but wait for the bounce.
FB - Facebook is a market darling. The volatility in the last several days has been incredible. Right now FB is facing resistance in the $90-100 region after a huge bounce off its Monday morning lows. If the market retreats lower then we might see FB retest the $80-85 region. I'd be tempted to buy calls on a bounce above $85 after another pullback.
DIS - Shares of DIS were crushed in August with a plunge from $121 to $90 (a -25% correction). Yet the outlook for DIS remains very bullish. The area to focus on is $90-95. This region should be support. A dip here or better yet wait for the dip and buy long-term calls on a bounce out of this range.
SBUX - SBUX is another high-profile market darling that was unfairly punished during the sell-off. I'd watch for a retest of round-number support near $50.00 and consider buying calls on a bounce there.
NKE - This is another high-quality name that fractured last week. I do not want to buy it after a rebound from $95 to $112 in four days. Keep an eye on the $100-105 area, which should be support.
HIG - Financials have not performed well this year but HIG has been an exception. When the market collapsed traders bought the dip at technical support. HIG managed to maintain is long-term bullish up trend. Another dip in the $43-44 area could be a bullish entry point.
DDD - After a decline from $97 a share to $11 in the last two years the selling might be finally nearing an end. Believe it or not but the action in DDD over the last four weeks is starting to look like a potential bullish double bottom. This is probably a higher-risk, more aggressive trade but a close above $15.50 might be a bullish entry point to consider.
PANW - This stock was another high-profile market darling and when it reversed lower the drop was sharp. PANW fell from $200 to $140 in less than five weeks. I would watch for another retreat into the $140-150 area. If PANW holds support in that region then we can re-evaluate a potential bullish trade.
UA - This company is outgrowing its larger rival NKE. Yet that didn't stop the stock from getting crushed with a drop from $100 to $80 in about four days. Wait for another pullback. The $85-90 area is where I would watch for new support.
STZ - We recently had STZ as an active trade. Unfortunately the market's volatility was too much and shares plunged to support near $115 and then almost recovered its entire decline. This bounce looks too far too fast. I'd watch for another dip into the $120-122 area and then consider buying calls on a rebound.
FL - This is another shoe-related company that is outperforming the broader market this year. Traders bought the dip near $64-65. Another dip near $65.00 could be a great entry point for bullish positions.
RAI - This tobacco company is popular among dividend investors. Even near all-time highs RAI still has a 3.4% yield. The stock is about to see a 2-for-1 split (scheduled for Sept. 1st). I would check on RAI a week or two after the stock split and watch for a dip into the $77.50 area. Post-split that will be $38-39 region and consider new positions if this support holds.
LPNT - Traders bought the dip near significant support and the long-term bullish trend of higher lows remains intact. LPNT does not have LEAPS options but interested traders could still buy calls a few months out. A close above the $82.50 area might be a good entry point.