Top Trade Ideas for the Week of September 22, 2014: Bonus Idea

• Posted by Greg Harmon
• on September 22nd, 2014

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

Yum Brands, Ticker: $YUM

Yum Brands, $YUM, is testing resistance at the zone between 72.80 and 73.30 in a tightening ascending triangle. This happens to be at the 50 day SMA now and the Bollinger bands are very tight. This is often a precursor to a move. The RSI is making a new higher high as it moves up into the bullish zone with a MACD that is rising. A break of resistance carries a target to 78. There is resistance at 73.85 and 76.43 with a gap to fill to 77.05 and then 81 and another gap to fill to 82.56 with 83.40 above that. Support lower comes at 71.30 and 69.75 followed by 68.25. Short interest is low at under 2% and there is large option open interest this week at the 75 Call Strike.

Trade Idea 1: Buy the stock on a move over 73.30 with a stop at 72.

Trade Idea 2: Buy the September 26 Expiry 73.5 Calls (offered at 38 cents late Friday).

Trade Idea 3: Buy the September 26 Expiry 73.5/75 Call Spread (31 cents).

Trade Idea 4: Buy the September 26 Expiry 73.5/75 1×2 Call Spread (24 cents).

Trade Idea 5: Buy the September 26 Expiry 73.5/75 Call Spread and sell the September 26 Expiry 71.5 Put (13 cents).

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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 we close the books on the September Options cycle and move into Fall, sees the equity markets still looking strong but a bit tired. Elsewhere look for Gold to continue lower along with Crude Oil. The US Dollar Index continues to look strong while US Treasuries are bouncing in their downtrend. The Shanghai Composite is also strong and looks better to the upside while Emerging Markets are biased to the downside. Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. The SPY and QQQ look the strongest but on the weekly timeframe, with some cracks on the daily charts. The IWM looks weak in the short run and probably continues towards the bottom if its consolidation zone. Use this information as you prepare for the coming week and trad’em well.

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