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

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

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

General Electric, Ticker: $GE

General Electric, $GE, is believed to be a barometer on the health of the market by many. It also has its lighting division headquartered a few miles down the road in East Cleveland, and their Christmas lights are pretty good.

You can see though that the stock sold off down to the October 15th low along with the market and has recovered since. Currently it is consolidating at 26.50, a level that has shown importance since May as both resistance and support.

The price action has also traced out a bearish Shark harmonic with the first Potential Reversal Zone (PRZ) at 27.20, as shown, and PRZ II above at 27.89. The momentum indicators, RSI and MACD, are both moving higher and in bullish territory supporting a break to the upside. Finally there is a Measured move to about 27.20 in the chart from looking at the last leg higher. Resistance above stands at 26.50 and 27.05 followed by 27.50 and 28. Support lower comes at 26.25 and 25.87 followed by 25.45 and 25. Short interest is low at about 1%.

Trade idea 1: Buy the stock on a move over 26.50 with a stop at 26.10.

Trade Idea 2: Buy the November 28 Expiry 26.50 calls (offered at 22 cents late Friday).

Trade Idea 3: Buy the December 25/27 Bullish Risk Reversal (8 cents).

Trade Idea 4: Buy the December 12 Expiry /January 27 Call Calendar (17 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, heading into the last full week before the Holiday season and November Options Expiration, sees the equity markets continuing to look better on the longer timeframe than on the daily.

Elsewhere look for Gold to continue the bounce in its downtrend while Crude Oil heads lower. The US Dollar Index looks to continue to move sideways with a chance of a pullback while US Treasuries are level in their pullback. The Shanghai Composite may consolidate in the uptrend while Emerging Markets muddle along sideways with a slight upward bias.

Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts are not as firm in that regard though, with the IWM in consolidation mode short term and the SPY and QQQ stronger but also looking better in the longer timeframe. 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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