Top Trade Ideas for the Week of September 2, 2012: Bonus Idea
- Posted by Greg Harmon
- on September 4th, 2012
Here is your Bonus Idea with links to the full Top Ten:
Walgreens, Ticker: $WAG
Walgreens, $WAG, is building a tight bull flag, consolidating the gap up from move following the mid July agreement with Express Scripts. The Bollinger bands are very tight, forecasting a move soon and with the 50 day Simple Moving Average (SMA) crossing up through the 200 day SMA recently, a Golden Cross, the bulls are favored. The Relative Strength Index (RSI) is also bullish and the Moving Average Convergence Divergence indicator (MACD) is negative, but moving back higher. Both support a break higher. Rounding out the picture, the 3-box reversal Point and Figure (PnF) has a price objective of 51. There is resistance higher at 36.60 and 37.85 followed by 39 and 40, and the Measured Move out of the flag takes it between those to 39.45. Support lower comes at 35 and 34.40 followed by 33.40, 31.90 and a gap fill to 30.97. The trigger is a move over 36.20.
Trade Idea 1: Buy the stock on the trigger with a 75 cent trailing stop.
Trade Idea 2: Buy the September 36 Calls (offered at 48 cents late Friday) on the trigger.
Trade Idea 3: Buy the October 36 Calls ($1.11) on the trigger and sell the October 40 Calls as the stock hits 37.85.
Trade Idea 4: Sell the October 33 Puts (35 cents) on the trigger.
Trade Idea 5: Combine ideas 3 and 4 for a 36/40 Call Spread Risk Reversal selling the 33 Put (76 cents).
Trade Idea 6: Buy the October/January 39 Call Calendar (58 cents) and sell October 34 Put (56 cents) for a longer term trade.
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After reviewing over 1,000 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, as September begins looks for Gold and Crude Oil to move higher with a chance that Crude consolidates. The US Dollar Index looks to continue lower while US Treasuries are moving up. The Shanghai Composite and Emerging Markets look to continue their downside moves with the chance that Emerging Markets find support nearby. Volatility looks to remain subdued but drifting higher keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. The SPY looks the most vulnerable of the three for a pullback and all three could easily continue sideways. Watch Treasuries, as their break higher would typically signal a pullback in Equities. 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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