New Watch List Entries
IBM - Intl. Business Mach.
NKE - Nike Inc.
LMT - Lockheed Martin
Active Watch List Candidates
BRK.B - Berkshire Hathaway
BVN - Compania de Minas Buenaventura
DE - Deere & Co
HD - Home Depot
SRCL = Stericycle Inc.
VMED - Virgin Media
WYNN - Wynn Resorts Ltd.
Dropped Watch List Entries
STLD graduated to the play list.
New Watch List Candidates:
Intl.Business Machines - IBM - close: 134.11 change: +2.44
I've been waiting for IBM to breakout from its trading range for months! Now it looks like it could happen soon. This technology giant has been dead money for almost a year. A breakout past resistance near the $135 area could be huge and herald a new leg higher. The Point & Figure chart is already bullish and is forecasting a $166 target. I am suggesting we wait for a move to $136.00 before launching bullish positions. If triggered we'll use a stop loss at $129.50. Our long-term target is $159.00.
FYI: earnings are due out on Oct. 18th.
International Business Machines (IBM) is one of the largest providers of IT technology, hardware, and services in the world.
Breakout trigger: $136.00
I Prefer the 2012 calls but readers may want to use the 2011s to capture a short-term move. I'm listing both.
BUY the 2011 Jan $140 calls (IBM1122A140)
- or -
BUY the 2012 Jan $150 calls (IBM1221A150)
Chart of IBM:
Nike Inc. - NKE - close: 79.57 change: +1.90
Named after the winged goddess of victory, shares of NKE are doing a victory lap right now with a new all-time high on Friday. The company reported strong earnings of $1.14 a share, which was 13 cents ahead of estimates. While revenues were a bit light the company said its backlog was strong and business in China grew +25%. That launched shares of NIKE to a new high of $81.70 on Friday morning. After four months of consolidating I suspect NKE is poised for a new leg higher. However, we don't want to chase it here. Shares are a little overbought. I'm suggesting we use a dip to $75.25 as our entry point. If triggered we'll use a stop loss at $69.45. Our long-term target is $98.00. I prefer the 2012 calls but more aggressive traders may want to use the 2011 calls and just exit early near $89 instead.
NIKE, Inc. based near Beaverton, Oregon, is the worldâ€™s leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Wholly-owned Nike subsidiaries include Cole Haan, which designs, markets and distributes luxury shoes, handbags, accessories and coats; Converse Inc., which designs, markets and distributes athletic footwear, apparel and accessories; Hurley International LLC, which designs, markets and distributes action sports and youth lifestyle footwear, apparel and accessories; and Umbro Ltd., a leading United Kingdom-based global football (soccer) brand.
(source: company press release or website)
Buy-the-Dip trigger: $75.25
BUY the 2011 Jan $80 calls (NKE1122A80)
- or -
BUY the 2012 Jan $90 calls (NKE1221A90)
Chart of NKE:
Lockheed Martin - LMT - close: 73.13 change: +1.46
LMT is one of the largest defense contractors and aerospace companies in the world. Unfortunately for shareholders the stock has been drifting lower for the last four months in a row. It looks like the trend has changed in the last couple of weeks. LMT managed to find some support near $68 and has broken out from a long, bull-wedge shaped pattern. Volume has been increasing on the bounce, which is a good sign. The company just recently raised their dividend +19% to $0.75 a share.
While I am tempted to buy call LEAPS now I think the market is overbought and poised to dip. I'm suggesting we use a dip to $70.50 as our entry point to buy call LEAPS on LMT. If triggered at $70.50 we'll use a stop loss under the September low at $67.90. Our first long-term target is $79.00.
Headquartered in Bethesda, Md., Lockheed Martin is a global security company that employs about 136,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. The Corporation's 2009 sales from continuing operations were $44.5 billion. (source: company press release or website)
Buy-the-Dip trigger: $70.50
BUY the 2011 Jan. $75 calls (LMT1122A75)
- or -
BUY the 2012 Jan $75 calls (LMT1221A75)
Chart of LMT:
Active Watch List Candidates:
Berkshire Hathaway - BRK.B - close: 83.32 change: +2.08
I can't explain why shares of BRK.B surged from $81 on Thursday's close to almost $86 Friday morning. I doubt it was Warren Buffett's cheerful announcement that "we're still in a recession". The rally quickly evaporated but shares still managed a +2.5% gain for the session. While I'm longer-term bullish on BRK.B we still don't want to chase it.
The plan is to buy calls on a dip at $80.50. If you're patient you could wait for a dip near $79.00 instead. If triggered at $80.50 I'm suggesting a stop loss at $74.95. Our long-term target is $92.50 and $99.00. I prefer the 2012 calls.
Buy-the-Dip trigger: $80.50
BUY the 2011 Jan. $85 calls (BRKB1122A85)
- or -
BUY the 2012 Jan $90 calls (BRKB1221A90)
Chart of BRK.B:
Compania de Minas Buenaventura - BVN - close: 41.85 change: +0.09
Shares of BVN didn't move much last week. The stock has continued to consolidate sideways under resistance near $42.50. More aggressive traders may want to consider opening bullish positions on a move over $43.00. I would prefer to wait for a dip. I'm still suggesting a trigger to buy calls on a dip at $38.50. If we are triggered at $38.50 we want to use a stop loss at $34.75. Our long-term target is $47.50 but we might adjust it higher.
Buy-the-Dip trigger: $38.50
BUY the 2011 March $40 calls (BVN1119C40)
Chart of BVN:
Deere & Co - DE - close: 72.64 change: +1.45
If the next wave of economic data continues to show improvement in the manufacturing sector it should be a strong positive for shares of DE. However, we don't want to chase it. The stock is very overbought even after the mid-week pull back. Currently the plan is to buy calls on a dip at $66.50. Given my outlook for the next few weeks market pull backs might be shallower than expected. More aggressive traders may want to start thinking about bullish positions on a dip near $68.50 instead.
If triggered at $66.50 we want to use a stop loss at $61.90.
Our long-term target is $79.00. I prefer the 2012 LEAPS.
Buy-the-Dip trigger: $66.50
BUY the 2011 March $70.00 calls (DE1119C70)
- or -
BUY the 2012 January $75.00 calls (DE1221A75)
Chart of DE:
Home Depot - HD - close: 31.64 change: +0.80
Uh-oh! It looks like shares of HD are starting to run away without us. The stock has performed very well the last few days and is quickly closing in on potential resistance near $32.00. We don't want to chase it. However, I will adjust our trigger higher from $28.75 to $30.00. We'll move the stop loss to $27.90. If triggered our long-term target is $33.90 and $36.00. We can expect to find resistance near $32.00. I prefer the 2012 calls over the 2011 calls.
Buy-the-Dip trigger: $30.00
BUY the 2011 Jan $30.00 calls (HD1122A30)
BUY the 2012 Jan $30.00 calls (HD1221A30)
Chart of HD:
Stericycle - SRCL - close: 69.86 change: +1.25
Shares of SRCL only lost a few cents last week but I do think the correction has begun. Overall I don't see any changes from my prior comments. The stock has shown lots of relative strength but we don't want to chase it.
Investors appear to be interested in medical waste disposal if shares of SRCL are any indication. After more than two months of consolidating near the $65 area it looks like SRCL is poised to move. We do not want to chase it here. Look for a dip back toward $66.00. We'll use a stop loss at $63.40. If triggered our long-term target is $79.00. However, we will have to adjust our exit point as SRCL does not have LEAPS. The longest dated options are 2011 Februarys.
Buy-the-Dip trigger: $66.00
BUY the 2011 February $70 calls (SRCL1119B70)
Chart of SRCL:
Virgin Media - VMED - close: 22.74 change: +0.57
VMED spent most of the week consolidating under resistance. Then the Friday morning market surge occurred and VMED jumped to a new multi-year high. I still hesitate to chase it here although more aggressive traders may want to consider scaling into positions. I am suggesting we be patient and wait for VMED to retest round-number support near $20.00 as our entry point.
If triggered we'll use a stop loss at $18.40. Our first long-term target is $24.00. I prefer the 2012 LEAPS over the 2011s.
FYI: Keep your position size small!
Buy-the-Dip trigger: $20.00
BUY the 2011 Jan $20.00 call (VMED1122A20)
BUY the 2012 Jan $25.00 call (VMED1221A25)
Chart of VMED:
Wynn Resorts - WYNN - close: 90.20 change: +3.15
As expected shares of WYNN continue to show volatility. The stock spiked to $95.88 on the 21st and slipped to $86.06 by the 23rd. Unfortunately our trigger is at $85.00. More aggressive traders may want to consider new positions on Friday's bounce. I'm actually going the opposite direction and moving our trigger lower. The market is overbought and due for a consolidation. I'm suggesting readers move their trigger to launch positions down to $81.50. We'll move the stop loss to $77.00.
Our first target to take profits is $99.00. Longer-term we'll consider a target at $109. I prefer the 2012 calls over the 2011s but if you're just aiming for $99 the 2011s can work. Remember, small positions to limit your risk. This is an aggressive trade.
Buy-the-Dip trigger: $81.50
BUY the 2011 Jan $90 calls (WYNN1122A90)
- or -
BUY the 2012 Jan $100 calls (WYNN1221A100)
Chart of WYNN: