I was going to suggest buying a dip in Frontier Oil Corp. (FTO) but the company's merger with Holly Corp. (HOC) is supposed to be final on Friday so there could be some unexpected volatility when the two companies (and stocks) merge into one. I would certainly keep it on your watch list.
I also want to keep an eye on CSX, a railroad stock. A rally past its all-time high near $26.75 could be a new entry point, especially after a three-month consolidation.
NEW BULLISH Plays
Dr. Pepper Snapple - DPS - close: 41.93 change: +0.52
Stop Loss: 39.40
Current Gain/Loss: unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger
Why We Like It:
I want to take another swing at DPS. The long-term chart for this stock looks very bullish. Shares have quickly recovered from its breakdown just over one week ago and now the move looks like a double bottom. Volumes have been rising on the current rally. The rally just tested its all-time highs set in May. I would expect a short-term dip next.
I am suggesting we launch positions at $41.25 with a stop loss at $39.40. Normally I would avoid holding over earnings but I am tempted to hold over DPS' late July earnings report. Our multi-week target is $46.00.
Trigger @ $41.25
Suggested Position: buy DPS stock @ $41.25
- or -
buy the Aug. $40 call (DPS1120H40)
Entry on July x at $xx.xx
Earnings Date 07/28/11 (unconfirmed)
Average Daily Volume: 1.8 million
Listed on June 30, 2011