Top Trade Ideas for the Week of October 22, 2012: Bonus Idea
- Posted by Greg Harmon
- on October 22nd, 2012
Here is your Bonus Idea with links to the full Top Ten:
Flowserve, Ticker: $FLS
Flowserve, $FLS, is testing a double top at 135.40 after a brief pullback to the 50 day Simple Moving Average (SMA). It has no resistance higher but a price objective from the 3-ox reversal Point and Figure chart to 153, and support below at 131, 128 and 125.65 before 120 and 117.25. The Relative Strength Index (RSI) is bullish but pulling back and the Moving Average Convergence Divergence indicator (MACD) is positive and growing. Both support further upside activity. Use a move over 135.50 as a trigger long and under 127.50 as a trigger short. The stock reports earnings on October 29th. Prices on options for short trade ideas will be significantly different at a stock price of 127.50.
Long Trade Ideas
1. Buy the stock on a move over the trigger with a $2.50 trailing stop.
2. Buy the November 135 Calls (offered at $2.90 late Friday) over the trigger.
3. Buy the November 135/140 Call Spread ($1.90) over the trigger.
4. Sell the November 125 Puts ($1.25) over the trigger.
5. Buy the November 135/140 Call Spread and sell the November 125 Puts(65 cents) over the trigger.
Short Trade Ideas
1. Sell the stock on a move under the trigger with a $2 trailing stop.
2. Buy the November 125 Puts ($1.45) on a move under the trigger.
3. Buy the November 125/120 Put Spreads (80 cents) on a move under the trigger.
4. Sell the November 135/140 Call Spread ($1.50) on a move under the trigger.
5. Buy the November 125/120 Put Spreads selling the November 135/140 Call Spread (70 cents) on a move under the trigger.
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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, sees heading into the new options cycle Gold and Crude Oil ready to pullback further with the possibility that Crude Oil continues to consolidate. The US Dollar Index is poised to continue to move sideways while US Treasuries are biased lower. The Shanghai Composite is biased to the upside with the long term downtrend while Emerging Markets look to continue to consolidate. Volatility looks to remain low but is hinting at a move higher now, leaving the intermarket bias for the equity index ETF’s SPY, IWM and QQQ, mixed. Longer term biases lower for the US Dollar and Treasuries support the upside while potentially rising Volatilty supports more pullback. The Indexes themselves reflect this with the SPY the strongest and still consolidating while the IWM is biased lower and the QQQ the pulling back. All three are biased to the downside in the short run but the IWM and QQQ are at longer term rising trendline support. Use this information as you prepare for the coming week and trade’m well.
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The premium service starts with an in depth Technical Analysis of the Macro Markets and their influencers. Reviewing the Equity Indexes, Gold, Oil, Bonds, The Dollar, Foreign Markets and Volatility and assessing the upcoming week. This is delivered Saturday morning. On Sunday you get 5 exclusive trade ideas culled from reviewing over 900 individual charts. Additionally there are 5 more ideas that I offer high level analysis to the public, but then expand with detailed triggers, stops, support and resistance levels and profit targets and how to adjust them only to premium users. The Top 10 Trade Ideas are screened against the potential to provide a 5 – 10% return in under 10 trading days. During the week I offer updates when pertinent to these trades or the market mood. I also offer 1-3 additional trade ideas daily, with the same detailed trading plan. These could also be good set ups from the charts but often are earnings related. Most of these mid week ideas are options focused. Many trades are proposed with both stock and options idea, and sometimes several options trades so you can choose according on your risk tolerance. Finally, you get access to me, to ask about these trades, the market or anything else.
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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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