Deckers Outdoor, a Chart with Some Much Goodness

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

Start off with the world’s best quarterback selling your slippers and maybe you do not need anymore. But the chart of Decker’s Outdoor, $DECK, maker of Uggs, also has a lot going for it. Take a look.

A very positive chart can get cluttered when many methods align. First not the rising trend support since the October low. Next, there is an Inverse Head and Shoulders pattern that triggered Monday on a break above the neckline. This carries a price objective to at least 102.65. The Bollinger bands are also opening higher as the momentum indicators, RSI and MACD are rising in support. These all point north. There is also a Measured Move higher that targets 98.30. Finally the Shark harmonic that has a Potential Reversal Zone higher at 101.75.

What does this all mean? 5 different forms of technical analysis support a continued move higher. So 5 different types of technical traders will be looking at this stock as a buy. I like to then limit my capital and use the technical levels to control risk by trading it with options.

Looking for this to play out over the next 4 weeks, you can put on a December 92.5/100 Call Spread Risk Reversal selling the December 87.5 Put for $1.45 or less. This is buying the December 92.50 Call and sell the December 100 Call but then also selling the December 87.5 Put. on a move to 100 at Expiry this trade will return $7.50 on a $1.45 cost. It uses margin as it has a short put. That also exposes you to owning the stock at 87.5 should it close under that level at December Expiry.

Get my book, Trading Options: Using Technical Analysis to Design Winning Options Trades.

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