Top Trade Ideas for the Week of March 17, 2014: Bonus Idea

• Posted by Greg Harmon
• on March 17th, 2014

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

Valeant Pharmaceuticals, Ticker: $VRX

Valeant Pharmaceuticals, $VRX, was a Top 10 pick the week of February 10th and performed admirably, running up $14 over the next two weeks. Since then it has pulled back and is consolidating in a range between 137.25 and 142.50. The Relative Strength Index (RSI) has pulled back to the mid line and is now level, remaining in the bullish zone, while the MACD continues to fall. There is resistance over 142.50 at 146.25 and 151.25 before 153.10, the all-time high. Support under 137.25 may be found at 133.50 and 129.50 followed by 115.

Long Trade Ideas:
#1: Buy the stock on a move over 142.50 with a stop at 140.
#2: Buy the March/April 145 Call Calendar (offered at $3.45 late Friday) on the same trigger.
#3: Sell the March/April 125 Put Calendar ($1.50 credit) on the same trigger.
Short Trade Ideas:
#1: Sell the stock short on a move under 137.25 with a stop at 139.75.
#2: Buy the April 135/125 Put Spreads ($2.85) on the same trigger.
#3: Buy the April 135/125 Put Spread and sell the March 130 Put ($2.45).
Neutral Trade Idea:
#1: Sell the March 130/145 Strangle ($1.30 credit).

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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 March Options Expiration week and ahead of the widely expected invasion of the Ukraine sees the markets are jittery if not tired or weak. Specifically look for Gold to continue higher in its uptrend while Crude Oil slows in its pullback and may be ready to reverse higher. The US Dollar Index looks to continue lower while US Treasuries are biased higher and near a break of major resistance. The Shanghai Composite and Emerging Markets are biased to the downside with risk of the Chinese market consolidating and then a possible reversal. Volatility looks to remain low but moving higher cutting the breeze at the back of the equity index ETF’s SPY, IWM and QQQ. Their charts suggest that the SPY and IWM are a bit stronger than the QQQ and may be ready to consolidate and reverse higher, while the QQQ is biased lower. Use this information as you prepare for the coming week and trad’em well.

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