Top Trade Ideas for the Week of February 27, 2012: Bonus Idea
- Posted by Greg Harmon
- on February 27th, 2012
Here is your Bonus Idea with links to the full Top Ten:
Schlumberger, Ticker: $SLB
Schlumberger, $SLB, has been riding the oil wave higher and is now at the resistance from August at 80. This level has been significant prior to that as support as well back as far as November 2010. It is consolidating now with resistance on a break higher at 80.75 and 85.10 followed by 89.40 and the triple top at 94.25. Support lower comes at 76.65 and 72.40 followed by 70.75, 67.14 and 64.90. The Relative Strength Index (RSI) is bullish and strong while the Moving Average Convergence Divergence (MACD) indicator stands near zero, offering no guidance. The Bollinger bands are very tight and may be starting to open for a move.
Trade Idea 1: Buy the stock on a move over 80.75 with a $1.60 trailing stop.
Trade Idea 2: Buy the April 82.50 Calls on a move over 80.75.
These were offered at $2.16 late Friday. This gives upside exposure with a nearly 40 delta and 6 weeks to run at less than 3% of the stock cost.
Trade Idea 3: Sell the April 70 or 72.50 Puts on a move over 80.75.
These were bid at 85 cents and $1.20 late Friday. These offer protection down to the 50 and 100 day Simple Moving Averages (SMA). A move higher and you keep the premium or you end up buying the stock at a 10 to 12% discount if it closes April Expiry under your strike.
Trade Idea 4: Sell the April 72.5/82.5 bull Risk Reversal on a move over 80.75.
This was offered at 96 cents late Friday. It gives the same upside participation as trade #2 but with a higher delta from selling the puts and offers the same downside protection as trade #3.
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After reviewing over 900 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Saturday which heading into the last week of February looks similar to last week with a few changes. Gold looks strong and ready to continue higher as Crude Oil may pause in its upward move. Both US Treasuries and the US Dollar Index looks better to the downside with a continued move lower by the Dollar likely. The Shanghai Composite and Emerging Markets both look better to the upside with the Chinese market likely to continue its move upward. The Volatility Index may not drop much more if at all but looks unlikely to rise soon either. These influencers create an environment for the Equity Index ETF’s SPY, IWM and QQQ to continue higher and the charts of the SPY and QQQ support the inter-market view. The IWM is biased higher, but needs to break a consolidation range before it can travel higher. A major move lower by the US Dollar or a breakdown by US Treasuries could accelerate Equities higher. Use this information as you prepare for the coming week and trade’m well.
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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