4 Trade Ideas for Honeywell: Bonus Idea

Here is your Bonus Idea with links to the full Top Ten:

Honeywell, $HON, started higher in February 2016. It started to level at the end of April that year and consolidated before a pullback to a low in October. A second leg higher took it to a high in March earlier this year before another consolidative pullback. It started the third leg of a 3 Drives pattern at the end of April, giving a target to 145.50.

Shorter term the stock price spiked to a high the last day of April but could not hold up. After some short term consolidation it is now back at that high. A Measured Move would give a target to 140. The Bollinger Bands® had squeezed in and are now expanding to allow a move higher. The RSI is in the bullish range and rising. The MACD is also turning back up after a slight pullback.

There is resistance at 134.65 and then free air above. Support lower comes at 132 and 129. Short interest is low at 1.1%. The company is expected to report earnings next July 21st. The stock pays a dividend with a yield of just under 2% and went ex-dividend last May 17th.

The June options chain shows very large open interest focused at the 213 and 135 strikes on the call side, straddling the current price. Put side open interest is smaller and focused at 125 and 130. In the July chain it is still building and reflects about a 4.1% move in the stock price by then. September open interest is centered around the 135 strike.

Honeywell, Ticker: $HON

Trade Idea 1: Buy the stock on a move over 134.65 with a stop at 132.

Trade Idea 2: Buy the stock on a move over 134.65 and add a July 130/September 140 collar for a 20 cent credit.

Trade Idea 3: Buy the July 135/140 Call Spread and sell the July 125 Put for $1.25.

Trade Idea 4: Buy the July/September 140 Call Calendar for $1.05.

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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 Friday which heading into the first full week of June sees equity markets looking strong.

Elsewhere look for Gold to push higher in consolidation while Crude Oil moves lower in its consolidation. The US Dollar Index continues to look weak and moving lower while US Treasuries are biased higher. The Shanghai Composite remains in consolidation and Emerging Markets are biased to continue higher.

Volatility looks to remain at abnormally low levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts show strength in the SPY and QQQ on both timeframes, with the QQQ starting to get extended on a momentum basis. The IWM looks strong on the longer timeframe as is slowly rises, but at the top of resistance short term. Use this information as you prepare for the coming week and trad’em 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.

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