We are still expecting a market correction but we're loading the watch list with stocks showing relative strength.
New Watch List Entries
CVD - Covance Inc.
MICC - Millicom Intl.
Active Watch List Candidates
CIR - CIRCOR Intl.
CRS - Carpenter Technology
EMC - EMC Corp.
IMN - Imation Corp.
MDR - McDermott Intl.
RT - Ruby Tuesday, Inc.
TRMB - Trimble Navigation
TSCO - Tractor
SAFM - Sanderson Farms Inc.
Dropped Watch List Entries
New Watch List Candidates:
Covance Inc. - CVD - close: 62.34 change: +0.95
Most of the healthcare stocks saw their rally retreat following the passage of the reform bill. For shares of CVD it was more like a pause. The stock has been able to maintain its bullish posture with a sideways consolidation in the $60-62 zone. If the broader market looked healthier I would consider bullish positions in CVD right now. However, since we are expecting a market correction sooner than later I am suggesting we wait for a pull back in CVD. Use a trigger to open bullish positions at $57.50. We'll use a stop loss at $54.00, which is under the 200-dma. If triggered our long-term target is $74.50. Currently the Point & Figure chart is bullish with a $79 target.
Covance, with headquarters in Princeton, New Jersey, is one of the world's largest and most comprehensive drug development services companies with annual revenues greater than $1.7 billion, global operations in more than 25 countries, and more than 10,000 employees worldwide.
(source: company press release or website)
Buy-the-Dip trigger: $57.50
BUY the 2010 November $60.00 calls (CVD 10K60.00)
Chart of CVD:
Millicom Intl. - MICC - close: 89.90 change: +0.75
Foreign wireless companies have continued to show relative strength and MICC hit new 52-week highs last week. Actually the trading action on Thursday looks like a possible short-term top and failed rally. If the U.S. market corrects I expect MICC to pull back as well. Broken resistance near $80.00 should be new support. I am suggesting a trigger to buy LEAPS at $81.00. If triggered we'll use a stop loss at $74.00. Our long-term target is $99.50 and the $109.00 levels.
Millicom International Cellular S.A. is a global telecommunications group with mobile telephony operations in 14 countries in Asia, Latin
America and Africa. It also operates cable and broadband businesses in five countries in Central America. The Groupâ€™s mobile
operations have a combined population under license of approximately 266 million people.
(source: company press release or website)
Buy-the-Dip trigger: $81.00
BUY the 2011 January LEAP $90.00 calls (MICC 11A90.00)
Chart of MICC:
Active Watch List Candidates:
CIRCOR Intl. - CIR - close: 32.07 change: -1.14
Shares of CIR produced a bearish reversal last week and the stock gapped down on Thursday following an analyst downgrade. Overall the trend is still higher and we have been anticipating a pull back. CIR should have support near $30.00 now. I'm suggesting we buy the longest calls available (currently Novembers) if CIR pulls back and hits $30.50. More conservative traders may want to wait and buy calls on a bounce from $30.00 instead of buying a dip to $30. If triggered we'll use a stop at $27.75. Our long-term target is the $40 area. FYI: The P&F chart is pointing to a $47 target.
NOTE: I would only start with half a position since the market has not started to correct yet and CIR has. We want to keep our exposure limited.
Buy-the-Dip trigger: $30.50
BUY the 2010 NOV $35 calls (CIR 10K35.00)
Chart of CIR:
Carpenter Technology - CRS - close: $37.28 change +0.68
CRS rallied again and hit new 52-week highs. Shares are up seven out of the last eight weeks. The action this past week looks like it could be a top but we'll have to wait for confirmation. The stock is very overbought and I think the correction will be a severe one. Our trigger to buy calls is at $30.00. If triggered we'll use a stop at $27.45. Our long-term target is $44.50. Currently the Point & Figure chart is very bullish with a $57 price target.
Buy-the-Dip trigger: $30.00
BUY the 2010 September $35 calls (symbol: CRS1018I35)
Chart of CRS:
EMC Corp. - EMC - close: 18.18 change: +0.14
The correction in EMC stalled last week but I don't think it's over. I am moving our trigger again. We now want to open bullish positions at $17.25 and we'll slide the stop loss to $16.20, if triggered. Our long-term target is $22.50. FYI: The Point & Figure chart is bullish with a $34.50 target. (Readers may want to buy 2012 calls and aim higher)
Buy-the-Dip trigger: $17.25
BUY the 2011 January $20.00 LEAP CALL (symbol: VUE1122A20)
Chart of EMC:
Imation Corp. - IMN - close: 11.13 change: +0.12
It looks like the correction in IMN may have finally started. Shares are testing round-number support near $11.00 but the market hasn't even begun to pull back yet. I believe IMN will trade near $10.00 before the correction is over.
I am suggesting we buy the stock (or calls) on a dip at $10.15. If triggered our first target is $12.25. Our second target is $14.25. FYI: The Point & Figure chart is bullish with a $17.50 target.
Buy-the-Dip trigger: $10.15
Buy the IMN stock at $10.15
BUY the 2010 October $12.50 call (symbol: IMN1016J12.5)
Chart of IMN:
McDermott Intl. - MDR - close: 26.86 change: -0.06
Shares of MDR continue to inch higher. The stock is nearing potential resistance at the $28.00 level and its 52-week highs. I am suggesting we use a breakout trigger to buy LEAPS at $28.25. If triggered we'll use a stop loss at $24.75. Our long-term target is $37.50. Investors may want to consider 2012 LEAPS and aim higher. Currently the Point & Figure chart is suggesting a $37 target.
Breakout trigger: $28.25
BUY the 2011 JAN $30.00 CALLS (MDR 11A30.00)
Chart of MDR:
Ruby Tuesday Inc. - RT - close: $10.81 change: +0.24
RT continues to trade sideways. The stock has been stuck in the $10.25-11.00 zone for three weeks now. You could argue the lack of profit taking is bullish. I suspect that RT will see a pullback following the company's earnings report due out on April 7th, 2010. Wall Street expects a profit of 23 cents a share. Due to the potential of a post-earnings sell-off I am lowering our trigger to open positions from $9.50 to $9.00. We'll keep the stop loss at $7.90.
I am suggesting readers buy the stock but options are available so we will list both. If triggered our first target is $12.25. Our second, longer-term target is $14.75. FYI: The Point & Figure chart is very bullish with a $19 target.
FYI: If RT happens to hit our trigger before the earnings report I would wait until after the earnings report before launching positions.
Buy-the-Dip trigger: $9.00
BUY the stock at $9.00
- or -
BUY the 2010 October $10.00 calls (symbol: RT1016J10)
Chart of RT:
Sanderson Farms Inc. - SAFM - close: 53.95 change: +0.34
SAFM appears to have found resistance in the $56.50-57.00 zone. The stock is very overbought and could be poised to correct soon. I am adjusting our entry point strategy. We're moving the trigger to buy calls from $51.00 down to $48.50. We'll move the stop loss to $43.90. If triggered our target is $59.75. I would aim higher but we only have a few months.
Buy-the-Dip trigger: $48.50 *new*
BUY the 2010 NOV $55 calls (SAFM 10K55.00)
Chart of SAFM:
Trimble Navigation - TRMB - close: 28.52 change: -0.20
TRMB has spent this past week consolidating sideways and digesting its previous gains. The trend is up but shares are very overbought with a nine-week rally with very little profit taking along the way.
Broken resistance near $26.00 should offer new support. I'm suggesting a trigger to buy calls at $26.05. If triggered we'll use a stop loss at $23.95. Our first target is $29.95. Our second target is $32.25. FYI: The P&F chart is bullish with a $42 target.
Buy-the-Dip trigger: $26.05
BUY the 2010 August $30 calls (symbol: TUH1021H30)
Chart of TRMB:
Tractor Supply Co. - TSCO - close: 59.40 change: +1.35
TSCO has been relatively resistant to profit taking. However, when the market does eventually correct we should see TSCO pull back and retest what should be support in the $55-54 zone. I'm suggesting a trigger to buy calls on a dip at $55.25. If triggered our first target is $69.00. We'll use a stop loss at $49.75.
Buy-the-Dip trigger: $55.25
BUY the 2010 October $55 call (symbol: QTF1016J55)
Chart of TSCO: