We're sliding a few triggers higher just as the stock market looks poised to retreat a little. We could see a few plays triggered in the next week or two.
New Watch List Entries
FWLT - Foster Wheeler
Active Watch List Candidates
BEAV - BE Aerospace Inc.
Cost - Costco Wholesale
ERJ - EMBRAER - Empresa Brasileira de AeronÃ¡utica
ESV - ENSCO Intl. Inc.,
IGT - Intl. Game Technology
MEE - Massey Energy Corp.
MTL - MECHEL OAO
MTW - Manitowoc Inc.
SPW - SPX Corp.
X - United States Steel Corp.
Dropped Watch List Entries
BG hit our trigger and graduated to the play list.
New Watch List Candidates:
FWLT $34.26 +0.67 -- Foster Wheeler AG
If you study the last several months of FWLT the stock has definitely produced a major bottom. Shares have actually built an inverse (bullish version) head-and-shoulders pattern. These past two weeks FWLT has rallied to new highs and broken through the neckline of this H&S pattern, which was major resistance. Now the rally looks a little extended and we want to buy LEAPS on a pull back. Short-term I was looking at the $31.00 level as a potential entry point but FWLT is a high-beta name so it should be more volatile than the rest of the market. Officially I'm listing our entry point at $29.00 and we'll put our stop loss at $25.95. More aggressive traders may want to use a wider stop and may want to jump in at $31.00. Our bullish target is the $45-50 zone.
Foster Wheeler is a global engineering and construction contractor and power equipment supplier, with a reputation for delivering high quality, technically-advanced, reliable facilities and equipment on time, on budget and with a world-class safety record.
(source: company press release or website)
Buy-the-Dip trigger: $29.00
BUY the 2011 January $30.00 calls (symbol: ZHF-AF)
Chart of FWLT:
Active Watch List Candidates:
BEAV $19.81 +0.13 -- BE Aerospace Inc.
BEAV is still trading under round-number resistance at $20.00. More aggressive traders may want to consider buying a dip near $18.00. I'm sticking to our plan to wait for a deeper correction and a trigger at $16.00. If triggered we'll use a stop loss at $13.40.
Buy-the-Dip trigger: $16.00
BUY the 2010 January $15.00 calls (symbol: BQV-AC)
BUY the stock at $16.00
Note: At $16.00 you could just buy the stock instead but the $15 calls will allow you more leverage on your investment.
Chart of BEAV:
COST $57.55 -0.41 -- Costco Wholesale
COST managed to hit new highs but it was a struggle. The stock looks very overbought and due for a correction. Our plan is to buy LEAPS on a dip at $51.50. If triggered we'll use a stop loss at $47.00. Our target is the $65.00 region.
FYI: COST is due to report earnings on October 7th. Readers may want to wait until after we see the market reaction to the company's earnings report before we commit any capital.
Buy-the-Dip trigger: $51.50
BUY the 2010 January $50 calls (symbol: PRQ-AJ)
Chart of COST:
ERJ $23.16 -0.02 -- EMBRAER - Empresa Brasileira de AeronÃ¡utica S.A.
The rally in ERJ has stalled. Shares have spent more than a week now bouncing around the $23-24 zone. I would expect a pull back toward $20.00 sooner rather than later. If triggered at $20.50 we'll use a stop loss at $17.75. Our target is the $29-30 zone. FYI: The P&F chart is bullish with a $42 target.
Buy-the-Dip trigger: $20.50
BUY the 2010 January $20.00 call (symbol: ERJ-AD)
Chart of ERJ:
ESV $41.25 -0.49 -- ENSCO Intl. Inc.
After a very strong two-week rally ESV is finally starting to correct. Our plan has not changed. We want to buy LEAPS on a dip at $38.00.
We'll use a stop loss at $34.90. The Point & Figure chart is bullish with a $55.00 target. We're going to aim for the $55-60 zone.
Buy-the-Dip trigger: $38.00
BUY the 2011 January $40 call (VKS-AH)
(More aggressive traders may want to trade January 2010 or March 2010 calls instead)
Chart of ESV:
IGT $21.83 -0.43 --- Intl. Game Technology
IGT has already started to correct. The stock is down four days in a row. Shares should find some support in the $20.00-19.00 zone. I'm inching our trigger up to $19.50. If triggered we'll use a stop loss at $17.40. We only want to open small positions at least 1/2 our normal trade size. Our long-term targets are $25.00 (sell half) and $29.00 (sell half).
Buy-the-Dip trigger: $19.50
BUY the 2010 January $20.00 call (IGT-AD) -or-
BUY the 2011 January $20.00 call (VGG-AD)
Chart of IGT:
MEE $31.41 -0.04 -- Massey Energy Corp.
MEE is also contracting after hitting new highs over $33.00 last week. Last week we raised the trigger to $25.00. Let's hold it there and see how deep MEE corrects. If triggered our stop loss is at $19.95. More conservative traders may want to use a stop near $21.75 instead. Our long-term target is the $40.00. Readers may want to consider the 2011 January calls instead.
Buy-the-Dip trigger: $25.00
BUY the 2010 January $25.00 call (MEE-AE)
Chart of MEE:
MTL $16.18 +0.07 -- MECHEL OAO
Metal and mining stocks continued to soar last week. We don't want to chase this move. The plan is to buy LEAPS or the stock on a dip at $13.25. We'll use a stop loss at $9.75. The Point & Figure chart is bullish with a $27 target. Our long-term target is also $27.00.
Buy-the-Dip trigger: $13.25
BUY the 2010 April $15.00 calls (symbol: MTL-DC)
or BUY the STOCK @ 13.25
Chart of MTL:
MTW $9.96 +0.06 -- Manitowoc Inc.
MTW shot to $10.75 last week. That's almost a 70% rally from its September lows. Shares are definitely overdue for a little profit taking. I am raising our trigger to buy LEAPS or the stock from $7.75 to $8.00. Currently the Point & Figure chart is bullish and the upside target has jumped from $18 to $23. I'm setting our long-term target at $17.00.
Buy-the-Dip trigger: $8.00 *new*
BUY the 2011 January $7.50 calls (symbol: VMT-AU)
or BUY the STOCK at $8.00
Chart of MTW:
SPW $63.82 +0.31 -- SPX Corp.
Nothing has changed since last week. The rally in SPW did appear to stall at $65.00. We're looking for a dip back toward prior resistance. I'm suggesting we buy LEAPS on a dip at $58.50. The Point & Figure chart is bullish with a target at $70. If triggered our long-term target is the $79.00 mark.
Buy-the-Dip trigger: $58.50
BUY the 2010 March $60 calls (symbol: SPW-CL)
Chart of SPW:
X $49.03 -0.12 United States Steel Corp.
I think we might be too optimistic hoping for a pull back toward $40.00 and its longer-term trendline of higher lows. The steel stocks have been very strong lately. On a short-term basis X looks like it could have support near $45.00. I'm not prepared to buy long-term LEAPS positions at $45.00 just yet but I will inch our trigger up to $41.00 and raise the stop loss to $37.40. Our target is the $60-70 zone.
Buy-the-Dip trigger: $41.00 *new*
BUY the 2010 January $45 calls (symbol: FBJ-AI)
Chart of X: