4 Trade Ideas for Nasdaq: Bonus Idea

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

Nasdaq, $NDAQ, has had a bumpy road higher over the last 6 months. Since making a low in May and then moving over the 200 day SMA in June, it ran to an August high, with a very long intraday candle along the way. A mild pullback reversed to a slightly higher high before retracing to the 200 day SMA in November. The reversal higher made for another higher high to start December, before pulling back again. The latest pullback touched the 50 and 100 day SMA last week and then printed a Morning Star reversal to end the week.

The RSI is also reversing back higher with the MACD leveling at zero. The Bollinger Bands® are still wide though. There is resistance at 77.50 and 79.25 then 80. Support lower comes at 75 and 74 then 73.40 and 71.75. Short interest is low at 2.2%. The company is expected to report earnings next on January 29th.

The January options chain shows the biggest open interest at the 77.50 and 80 Call Strikes as well as above at 85, with smaller amounts on the Put side at 77.50. February options have very little open interest yet, but forecast a 5.75% move in the stock by expiry, giving a range of 71.60 to 80.50. The March options show open interest biggest at the 80 Call and then the 75 Calls and from 67.50 to 75 Puts.

Nasdaq, Ticker: $NDAQ

Trade Idea 1: Buy the stock now (over 76) with a stop at 75.

Trade Idea 2: Buy the stock now and add a February 75/70 Put Spread ($1.25) for protection through earnings. Also sell the February 80 Calls (70 cents) to lower the cost.

Trade Idea 3: Buy the January 75/77.5 Bull Risk Reversal (free).

Trade Idea 4: Buy the January 77.5/80 Call Spread (65 cents) and sell the January 75 Put (80 cent credit).

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After reviewing over 1,000 charts, I have found some good setups for the week. This week’s list contains the first five below to get you started early. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which heading into the historically light Christmas week sees equity markets looking strong.

Elsewhere look for Gold to continue higher in its uptrend while Crude Oil also forges higher. The US Dollar Index looks to continue to mark time sideways while US Treasuries are biased lower. The Shanghai Composite and Emerging Markets are looking to stay in consolidation mode.

Volatility looks to remain very low keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts agree, especially in the longer timeframe, but may have a quiet week in the short run. Use this information as you prepare for the coming week and trad’em well.


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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.

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