Top Trade Ideas for the Week of April 16, 2012: Bonus Idea

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

Apple, Ticker: $AAPL

The much talked about parabolic run up by Apple, $AAPL, finally looks as if it might rollover. The Relative Strength Index (RSI) is in bullish territory but is at levels not seen since December and falling steeply. The Moving Average Convergence Divergence (MACD) indicator is negative and growing rapidly, close to the extreme seen twice in 2008 but not at any other time in the last 10 years. It also sits 8.7% above it’s 50 day Simple Moving Average (SMA) after Friday cracking the 20 day SMA for the first time this year. There is support lower at 600 and 596 followed by 577 and 568 before 553, 548 and 525. Resistance higher comes at 620 and the previous high at 644. I like this for more downside. Apple reports earnings on April 24th.

Trade Idea 1: Short the Stock on a move under 596 with a stop at 606 initially.
As it moves below 590 move to a $10 trailing stop.

Trade Idea 2: Sell the April 27 Expiry 645 Calls.
These were bid 1.08 late Friday. Take this off for earnings.

Trade Idea 3: Buy the May 595 Puts on the same 596 trigger.
These were offered at 27.15 late Friday.

Trade Idea 4: Buy the May 595/545 Put Spread on the same 596 trigger.
These were offered at 16.90 late Friday.

Trade Idea 5: Buy the May 590/545 1×2 Ratio Put Spread now.
These were offered at 4.40 late Friday. This trade takes a lot of margin and puts you in the stock on a close under 545 on May Expiry with a 500 basis. This is a good hedge to your long $AAPL stock with a stop at 600.

Trade Idea 6: Buy the May 590/560 Put Spread and sell the May 545/515 Put Spread to cut the cost.
This combination was offered at 6.45. It pays out a maximum of 30 on a close between 545 and 560 on May Expiry, or better than 4.6:1 and only is profitable between 521.45 and 583.55 at expiry.

Trade Idea 7: Buy the May 580/540/500 Put Butterfly.
Buying both the May 580 and 500 Puts and selling 2 of the May 540 Put, this was offered at 6.75 late Friday. It is profitable on a close between 506.75 and 573.25 at May Expiry and has a maximum payback of $40 at 540.

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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 as the market heads into the height of earnings season like the mood has turned a bit more bearish. Gold continues to look better to the downside, but would not surprise if it hovers while Crude Oil looks better lower in the very short term within the uptrend. The US Dollar Index and US Treasuries continue their upside bias. The Shanghai Composite is verging on moving from an upside bounce to a uptrend while Emerging Markets look like the consolidation may be ending with resolution to the downside. The Volatility Index has solidly confirmed that the bottom is in and the bias is to the upside. These influencers create a mosaic giving the Equity Index ETF’s SPY, IWM and QQQ a downward bias and their charts in general agree. The SPY looks to be the most vulnerable for a further fall with the IWM showing a bit more stability as it has moved lower fastest and the QQQ still the strongest, but cracking. Use this information as you prepare for the coming week and trade’m 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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