New Watch List Entries
FCX - Freeport McMoran
UNG - Natural Gas ETF
Active Watch List Candidates
BEAV - BE Aerospace Inc.
CRS - Carpenter Technology
DBC - PowerShares Commodity Index
DO - Diamond Offshore
JOYG - Joy Global Inc.
MT - ArcelorMittal
RIG - Transocean Ltd.
SGY - Stone Energy Corp.
WFR - MEMC Electronic Materials Inc.
Dropped Watch List EntriesAGU - Agrium was removed from the watch list.
New Watch List Candidates:
FCX $58.51 -1.91 - Freeport McMoran
The rally in FCX could be running out of gas. The U.S. dollar is beginning to bounce and that will put pressure on copper and gold futures. Meanwhile FCX looks overbought and has rallied to resistance near $60.00. Aggressive traders might want to consider buying LEAPS on a dip near $50.00 or its exponential 200-dma. I am setting our trigger to open positions at $46.00. If triggered our stop loss will be $35.95. Our long-term target is $69.00. FYI: The P&F chart is bullish with an $84 target.
Buy-the-Dip trigger: $46.00
BUY the 2011 Jan. $60 call (symbol: OBQ-AL)
Chart of FCX:
UNG $14.67 -0.13 - U.S. Natural Gas ETF
A lot of the LEAPStrader readers also read OptionInvestor. Jim made a good argument for buying the UNG natural gas ETF last Tuesday. Prices have been severely depressed due to a glut of inventory thanks to new technology in directional drilling and the new shale beds. Volumes on the UNG have soared as more and more investors speculate on a bottom for natural gas prices. Currently the UNG is forming a neutral, pennant-shaped consolidation with higher lows and lower highs. I am suggesting that investors use a trigger at $16.25 to catch a breakout. If triggered our long-term target is the $25-30 zone. This can be a volatile ETF so we're going to use a wide stop loss at $12.60.
Breakout trigger: $16.25
BUY the 2011 Jan. $20 call (symbol: ZZM-AT)
Chart of UNG:
Active Watch List Candidates:
AGU $50.14 -0.34 -- Agrium Inc.
I am dropping AGU from the watch list. We've been waiting for weeks and while this industry of fertilizer/chemical stocks is starting to look bullish again they also look a little extended. I do think there is opportunity here with AGU, CF, POT, MOS, IPI, SQM and the rest of the group. We need to be very selective with our entry point if we're going to hold a position for several months. Don't forget that AGU is trying to buy CF, which is trying to buy TRA. I'm definitely keeping these stocks on my personal watch list.
BEAV $16.32 +0.29 -- BE Aerospace Inc.
The current rally in BEAV is about six weeks old and way overdue for a correction. Our entry point to buy LEAPS is at $12.50. Our stop loss is $9.45.
Buy-the-Dip trigger: $12.50
BUY the 2010 January $15.00 calls (symbol: BQV-AC)
Note: At $12.50 you could just buy the stock instead but the $15 calls will allow you more leverage on your investment.
Chart of BEAV:
CRS $23.59 -0.69 -- Carpenter Technology
It looks like the rally in CRS might be running out of steam. The stock made new relative highs but the MACD did not. CRS just closed under its 10-dma on Friday. Our plan is to buy LEAPS at $20.25. Our stop loss is at $17.45, which might be too tight.
If triggered we have two targets. Our first target to take profits is $29.85. Our second target is $34.90.
Buy the dip trigger: $20.25
BUY DECEMBER 2009 $25 CALL (CRS-LE)
Chart of CRS:
DBC $23.85 -0.34 -- PowerShares DB Commodity Index (ETF)
The rally in commodities is starting to waver. The DBC has spent the last two weeks churning sideways near $24.00 and its exponential 200-dma. We might want to raise our entry point to $22.00 but for now we'll keep it at $21.50. Our long-term target is $32.00.
Buy-the-Dip trigger: $21.50
BUY the 2011 January $25 (VCZ-AY) or $30 (VCZ-AD) calls
Chart of DBC:
DO $91.71 -0.86 -- Diamond Offshore
I kick myself every week for not buying DO at $70.00. Now I'm just hoping the stock sees a sell-off so we can jump in. I'm adjusting our entry point to the $81.00-78.00 zone. Our new stop is $69.95. We want to sell half our position at $99.00 and half at $114.90.
Buy The Dip trigger: $81.00
BUY JANUARY 2010 $90 CALL (symbol: KWJ-AR)
Chart of DO:
JOYG $40.38 -0.98 -- Joy Global Inc.
The rally in copper futures has been really impressive but not quite as impressive as the surge in shares of JOYG. The stock is way overbought and due for a correction. Our entry point to buy LEAPS is at $33.00. We'll up the stop loss to $24.75. Our first target is $48.50.
Buy-the-Dip trigger: $33.00-30.00 zone
BUY the 2010 January $40.00 call (symbol: JQY-AH)
Chart of JOYG:
MT $35.09 -1.40 -- ArcelorMittal
Some of the short-term technicals are still suggesting that MT will see a correction soon. Our entry point to buy LEAPS is at $30.50. You can still wait for a dip near the 50-dma if you want to. Our target is the $50 region. We'll use a stop loss at $24.45.
FYI: MT plans to hold its annual shareholder meeting on June 17th at company headquarters in Luxembourg.
Buy-the-Dip trigger: $30.50-27.50 zone
BUY the 2010 January $40 calls (symbol: LLU-AH)
Chart of MT:
RIG $82.58 -2.07 -- Transocean Ltd.
We're still waiting for a correction in RIG. Right now the plan is to buy LEAPS at $72.50 but we might want to jump in early near $75.00. For now the stop loss, if triggered, is at $62.40. Target is $98.50.
Buy-the-Dip trigger: $72.50.
BUY the 2010 January $90.00 call (symbol: WVX-AR)
Chart of RIG:
SGY $8.69 -0.26 -- Stone Energy Corp.
It looks like the banking stocks aren't the only ones raising capital by selling more stock. Last week SGY sold another 7 million shares at $8.00 a share. That's the huge spike you see in volume last week. SGY only had 40 million shares outstanding. 7 million shares is almost 20% more. I'm shocked that the stock has held up so well.
Currently our plan is to buy shares of SGY or the LEAPS at $6.35. Our stop loss is $4.90. Our target is $14.75.
Buy-the-Dip trigger: $6.35
BUY the 2010 January $10 calls (symbol: YLO-AB)
Chart of SGY:
WFR $20.16 -0.14 -- MEMC Electronic Materials Inc.
WFR offers a lot of potential especially if congress passes an energy bill with a big focus on solar energy. Our plan is to buy LEAPS on a dip into the $17.50-15.00 zone. Stop loss at $14.95. Target is the $30-40 zone.
Buy-the-Dip trigger: $17.50-15.00 zone
BUY the 2010 January $20 LEAP (symbol: CJC-AD)
Chart of WFR: