Top Trade Ideas for the Week December 29, 2014: Bonus Idea

• Posted by Greg Harmon
• on December 29th, 2014

Top Trade Ideas for the Week December 29, 2014: Bonus Idea

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

Akamai Technologies, Ticker: $AKAM

Akamai Technologies, $AKAM, is at a resistance zone for the third time since mid September. This time it arrives from a higher low and a bounce off of the 50 and 100 day SMA’s. It sits there with a rising RSI that is in the bullish zone. It never left holding at 40 on the pullback. It also has a bullish MACD, that crossed up just last week.

On a push through the zone this would target a move to 72.75 on a comparable move from the low in October to the resistance, a Measured Move higher. Support lower comes at 60 and 56 before 52. It has possible resistance higher at about 78.80 and 117, but those are back from the dot-com bubble days in 2000.

In fact, on a longer timeframe this is a major break out. And it has not even retraced 23.6% of the collapse yet! The company is expected to report earnings next February 11th before the market opens.  Short interest is low at 2.3%.

Trade Idea 1: Buy the stock on a move over 65 with a stop at 62 (or 60 for a long term buy).
A straight stock trade.

Trade Idea 2: Buy the January 65 Calls (offered at $1.40 late Friday).
A straight upside participation play with risk defined to the option premium paid.

Trade Idea 3: Buy the February 60/65 bullish Risk Reversal ($1.85).
A leveraged play that takes your participation through the earnings event.

Trade Idea 4: Buy the January 9 Expiry 65/66 Call Spread selling the January 9 Expiry 63 Puts (22 cents).
A short term trade with a lot of leverage for a possible return near 5:1.

Trade Idea 5: Buy the January 2016 Expiry 67.5/February 70 Call Diagonal ($6.40).
This is a low risk, defined cost way to participate in the stock move over the next year. Look to continue to sell short dated calls to claw back premium as the February Calls expire.

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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 week of 2014, sees the equity markets looking positive, with a possible major rotation into small caps under way.

Elsewhere look for Gold to bounce hold between 1180 and 1200 in its downtrend while Crude Oil builds a base near 55. The US Dollar Index looks to continue higher while US Treasuries are biased lower in the short run, within their uptrend. The Shanghai Composite sits at resistance but with a strong look and could just keep moving up while Emerging Markets are biased to the upside in their downtrend.

Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ, despite the moves higher. Their charts look solid as the SPY sits at all-time highs and the QQQ at 14 year highs. The IWM may be breaking a 14 month range to the upside, which could trigger a major rotation into small caps. Use this information as you prepare for the coming week and trad’em well.

On a personal note, Congratulations to my parents on their 52nd Wedding Anniversary today. My mom is a reader of this space so feel free to leave a nice comment here.

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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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