New Watch List Entries
GHM - Graham Corp.
Active Watch List Candidates
AVY - Avery Dennison
BUCY - Bucyrus Intl.
CHK - Chesapeake Energy Corp.
CR - Crane Co.
ESV - ENSCO Intl. Inc.,
MTW - Manitowoc Inc.
PCX - Patriot Coal Corp.
TRN - Trinity Industries
TXT - Textron Inc.
Dropped Watch List Entries
FST graduated to our play list.
New Watch List Candidates:
GHM $17.71 +1.43 -- Graham Corp.
GHM is an industrial goods producer and the stock has produced a significant base over the last several months. Shares are starting to breakout to new highs for the year. We don't want to chase the rally but if the market corrects we want to be ready to buy a dip.
I'm suggesting readers buy March LEAPS, which are the longest ones available, on a dip at $15.15. Investors will want to note that GHM is due to report earnings on October 30th before the opening bell. More conservative traders may want to wait until after the earnings report before initiating positions.
I wish there were longer-dated options available. As an alternative investors may want to just buy the stock instead. Our target is $24.00. We'll use a stop loss at $12.40.
With world-renowned engineering expertise in vacuum and heat transfer technology, Graham Corporation is a global designer, manufacturer and supplier of ejectors, pumps, condensers, vacuum systems and heat exchangers. For over 70 years, Graham Corporation has built a reputation for top quality, reliable products and high-standards of customer service. Sold either as components or complete system solutions, the principal markets for Grahamâ€™s equipment are the petrochemical, oil refining and electric power generation industries, including cogeneration and geothermal plants. Graham equipment can be found in diverse applications, such as metal refining, pulp and paper processing, ship-building, water heating, refrigeration, desalination, food processing, drugs, heating, ventilating and air conditioning. Grahamâ€™s reach spans the globe. Its equipment is installed in facilities from North and South America to Europe, Asia, Africa and the Middle East.
(source: company press release or website)
Buy-the-Dip trigger: $15.15
BUY the 2010 March $15.00 Call (GHM-CC)
BUY the stock (GHM) at $15.15
Chart of GHM:
Active Watch List Candidates:
AVY $ 37.80 -0.32 -- Avery Dennison
AVY has continued to show relative strength. The stock is even more overbought than it was a week ago. Right now the plan is to buy LEAPS on a dip at $32.00. If triggered our stop loss is $29.40.
Our long-term target is $44.50. FYI: Earnings are due out on October 27th.
Buy-the-Dip trigger: $32.00
BUY the 2010 January $35 calls (symbol: AVY-AG)
Chart of AVY:
BUCY $39.05 -0.68 -- Bucyrus Intl.
BUCY has extended its gains and hit new highs for the year. The stock is nearing potential round-number resistance at $40.00. I'm sticking with our trigger at $34.10. A post-earnings sell-off could be just the catalyst we need to get triggered.
We'll use a stop loss at $29.00. Our long-term target is $49.00.
FYI: Earnings are expected on October 22nd after the closing bell.
Buy-the-Dip trigger: $34.10
BUY the 2010 April $35.00 call (HBU-DG)
Chart of BUCY:
CHK $28.67 -0.26 -- Chesapeake Energy Corp.
CHK produced a bearish reversal at resistance on Wednesday. I'm expecting a pull back toward $25.00, which would be enough to hit our trigger. More conservative traders may want to move their trigger lower toward $23.00 or $22.00 and place your stop under $20.00. I'm leaving our stop at $21.45 for now. If triggered our target is $40.00.
FYI: Earnings are expected on October 26th but the date is not confirmed yet.
Buy-the-Dip trigger: $25.00
BUY the 2011 January $25 calls (symbol: VEC-AE)
Chart of CHK:
CR $27.21 -0.35 -- Crane Co.
CR managed to hit new highs again last week but momentum is stalling. I am adjusting our trigger from $25.00 down to $24.25. We'll move the stop loss to $21.90. Our long-term target is $34.75. FYI: Earnings are expected on October 26th.
Buy-the-Dip trigger: $24.25
BUY the 2010 March $25 calls (CR-CE)
Chart of CR:
ESV $47.29 -1.05 -- ENSCO Intl. Inc.
ESV has soared to new 52-week highs. Shares are short-term overbought and I suspect the stock will see some post-earnings profit taking. ESV reports earnings on October 22nd before the opening bell.
Our trigger is to buy LEAPS on a dip at $40.00. We'll use a stop at $37.25. We're going to aim for the $55-60 zone.
Buy-the-Dip trigger: $40.00
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:
MTW $10.66 -0.23 -- Manitowoc Inc.
MTW also managed to hit new 2009 highs but momentum is fading. I would expect a correction toward the rising 50-dma. Thus we need to raise our trigger. I'm adjusting the entry point to $8.60.
It may take a couple of weeks for MTW to hit our entry point. Our long-term target is $17.00.
FYI: Earnings are out on Oct. 29th.
Buy-the-Dip trigger: $8.60
BUY the 2011 January $10 calls (symbol: VMT-AB)
or BUY the STOCK at $8.60
Chart of MTW:
PCX $13.29 -0.71 -- Patriot Coal Corp.
PCX has rallied to resistance near $14.00 and stalled. This could be a double top if it reverses here. I'm expecting some profit taking. The plan is to buy LEAPS on a dip at $11.00. The stock can be volatile so we'll use a stop loss at $8.75. Our long-term target is the $20-25 zone.
FYI: Earnings are out on October 27th before the opening bell.
Buy-the-Dip trigger: $11.00
BUY the 2011 January $15 LEAP call (OKI-AC)
Buy the stock @ 11.00.
Chart of PCX:
TRN $18.22 -0.49 -- Trinity Industries
TRN may have formed a bearish double top with resistance near $19.00. I am adjusting our trigger to buy LEAPS from $17.05 to $16.25. We'll keep the stop loss at $13.90.
Our target is the $25-30 zone. More conservative traders may want to use a stop closer to $15.00.
Buy-the-Dip trigger: $16.25
BUY the 2011 January $20 LEAP call (XYT-AD)
Chart of TRN:
TXT $19.92 -0.42 -- Textron Inc.
Nothing has changed for us since last week. We're still waiting for a correction toward $16.00. Our trigger to open positions is at $16.25. If triggered we'll use a stop loss at $13.75. Our long-term target is the $30 region.
Buy-the-Dip trigger: $16.25
BUY the 2011 January 17.50 call (symbol: XUD-AW)
Chart of TXT: