I hesitate to add a bunch of new watch list candidates. Short-term we are expecting the market to bounce for another week or two before rolling over again. If the market does roll over then we'll be looking for more bearish candidates near the end of July. Last week I mentioned some ETFs to watch. Keep an eye on the DBC, a failure near 23 might be a bearish entry point. On the XLY look for a failure near 31. For the KOL watch for a failure near the 34-35 zone. On the XLF I would look for a breakdown under 13.00.
When the market rolls over investors should turn more defensive. Therefore we may want to check out more defensive dividend plays. I see potential in the utility sector. Stocks like ED, SO, PEG, and NI could be potential candidates and these have an average dividend yield of 5.1%.
Since I don't see any long-term entry points at this time readers may want to consider some short-term trades. Stocks like BAX, PCLN, AXO, MTB, ACGL, and CF look like they might be short-term candidates. Watch them for a potential entry point but my time frame would only be a couple of weeks. I would also keep an eye on the mining stocks. Copper looks like it is setting up for an oversold bounce and when it breaks the neckline of the inverse head-and-shoulders pattern the mining stocks could be outperformers for a couple of weeks.
One more candidate I would watch is CLB. Shares of this oil services stock have been really outperforming its peers. CLB is due to split 2-for-1 on Monday, July 9th. I'm putting this on my personal watch list as a possible bullish candidate!
New Watch List Entries
None, no new watch list candidates
Active Watch List Candidates
BVN - Compania de Minas Buenaventura
CRM - Salesforce.com
GLD - SPDR Gold ETF
MET - MetLife Inc.
Compania de Minas Buenaventura - BVN - close: 39.18 change: +0.93
Did we miss the entry point? Traders bought the dip twice in the $36-37 zone with a little help from BVN's rising 50-dma. It certainly looks like BVN is poised to rally toward its highs near $42.50. However, I don't believe the market's correction is over. A month from now BVN could be trading at $35.00 or lower. Aggressive traders may want to consider small positions now. I am suggesting we be patient and wait. Keep the trigger at $32.00 (although I could see buying a bounce from $35.00 if one happens, our previous entry point was $35.15).
If triggered at $32.00 we'll use a stop loss at $29.49 (new change).
Our first target is $42.25. Our second, more aggressive target is $47.50.
Buy-the-Dip trigger: $32.00
BUY the 2010 December $40 calls (BVN1018L40)
Chart of BVN:
Salesforce.com - CRM - close: 91.78 change: +0.21
With a bounce from $84 to $92 you could pose the same question for CRM, did we miss the entry point? My answer is still no. Yes stocks might rally for the next week or two but we're still expecting a deeper correction. Keep an eye on the $75 region for support. Right now our suggested trigger to buy call LEAPS is $76.00. If triggered we'll use a stop loss at $69.00. Our first long-term target is $97.00. Our second target is $119.00. Please note our new options below.
Buy-the-Dip trigger: $76.00
BUY the 2011 January $80 calls (CRM 11A80.00)
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BUY the 2012 January $90 calls (CRM 12A90.00)
Chart of CRM:
SPDR Gold ETF - GLD - close: 118.36 change: +1.15
Gold delivered a bounce on Friday but I don't believe the correction is over. Equities rarely move in a straight line. After failing to breakout past the $122-125 zone for multiple weeks the GLD will likely retest its longer-term bullish trendline. I am expecting a correction toward the $112 level. I'm suggesting we adjust our trigger down to $112.50. We'll move our stop down to $107.40. Our target is $140.
Buy-the-Dip trigger: $112.50
BUY the 2010 March $120 call (GLD 11C120.00)
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BUY the 2012 Jan. $130 call (GLD 12A130.00)
Weekly Chart of GLD:
MetLife Inc. - MET - close: 40.10 change: +0.66
The insurance sector still has potential but I remain somewhat cautious on launching new positions. Shares of MET managed to fill the gap created a week ago but there is still multiple layers of overhead resistance. The clearest level is the $42.00 mark. Right now I'm suggesting bullish call positions with a trigger at $43.25 but be sure to keep your positions very small. If triggered we'll use a stop loss at $36.20 under the July low.
There is some resistance near $48 and $50 but our long-term target is the $55-60 zone.
Breakout trigger: $43.25(adjusted from last week)
BUY the 2011 January $45 call (MET 11A45.00)
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BUY the 2012 January $50 call (MET 12A50.00)
Chart of MET: