Top Trade Ideas for the Week of August 18, 2014: Bonus Idea

• Posted by Greg Harmon
• on August 18th, 2014

Here is your Bonus Idea:

Union Pacific, Ticker: $UNP

Union Pacific, $UNP, has been in a consolidation since early June. The last half of July saw a dip out of the tight zone to the 100 day SMA before returning higher. Now it is approaching the top of the consolidation with a rising and bullish RSI and a MACD that is also rising. These support more upside price action. A break of the consolidation higher carries a target move to 112.50 based on a Measured Move equivalent to the move into the consolidation from the prior basing. There is possible resistance in the zone 102.90 to 103.70 and support lower at 99 and 96.65 followed by 95. Short interest is less than 1%.

Trade Idea 1: Buy the stock now with a $2 trailing stop.

Trade Idea 2: Buy the stock on a move over 103.70 with a stop at 102.

Trade Idea 3: Buy the September 103 Calls (open Monday, probably about $1.15) on the same trigger.

Trade Idea 4: Sell the August 29 Expiry 103 Calls and buy the September 103 Calls, a Call Calendar (65 cents).

Trade Idea 5: Buy the August 29 Expiry/September 103 Call Calendar (65 cents) and sell the 1/2 size of the September 100 Puts ($1.17) and 1/2 size of the September 95 Puts (33 cents) (net trade is 15 cent credit, you may be able to substitute the September 97 Puts for the 95 and 100 combination).

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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, as the books are closed on the August Options Expiration and we head into the last week of Summer sees the equity markets are still with some turbulence. Elsewhere look for Gold to bounce around the 1300 level while Crude Oil continues to be biased lower, but mindful of the bounce Friday. The US Dollar Index looks toppy and possibly ready for a correction lower while US Treasuries continue to be biased higher. The Shanghai Composite and Emerging Markets are consolidating but with the Chinese market biased higher and Emerging Markets having trouble at resistance and looking toppy. Volatility looks to remain low keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts show that all look good on the longer timeframe but the QQQ the strongest in the short term with the SPY close behind and the IWM the weakest. Use this information as you prepare for the coming week and trad’em well.

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