Top Trade Ideas for the Week of August 27, 2012: Bonus Idea

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

Bed Bath & Beyond, Ticker: $BBBY

Bed Bath & Beyond, $BBBY, is building a bull flag between 66 and 67 with a Relative Strength Index (RSI) that is rising and bullish and a Moving Average Convergence Divergence indicator (MACD) that is positive both supporting further upside. The Measured Move higher on a break over 678 takes it to 70 and the 3-box reversal Point and Figure chart (PnF) carries a price objective of 82 above that. There is resistance higher at 69.20 and 72.10 followed by 75. Support is found below at 65.20 and 63.50 followed by 62.70 and 59.90.

Trade Idea 1: Buy the stock on a move over 67.10 with a $1 trailing stop.

Trade Idea 2: Buy the September 67.5 Calls on a move over 67.10. These were offered at $1.67 late Friday.

Trade Idea 3: Sell the September 62.5 Puts on the same trigger. These were bid at 87 cents late Friday.

Trade Idea 4: Combine trades 2 and 3 to make a bullish September 62.5/67.5 Risk Reversal. This was offered at 80 cents late Friday.

Trade Idea 5: The same 62.5/67.5 bullish Risk Reversal but in October to give it more time. This was offered at 95 cents late Friday.

Trade Idea 6: Buy the September/October 70 Call Calendar. This was offered at 73 cents late Friday.

Trade Idea 7: Add a short September/October 62.5 Put Calendar to trade 6. This was bid at 67 cents late Friday and brings the net cost down to 6 cents.

Trade Idea 8: Add a short October 57.5 Put (64 cent credit) or September 62.5 Put (87 cent credit) to trade 6.

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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 Saturday which, as the last week of unofficial Summer begins looks for Gold and Crude Oil to continue higher with a chance of consolidation for either. The US Dollar Index seems biased lower in the uptrend while US Treasuries may move in a tight range. The Shanghai Composite looks lower still and Emerging Markets looking like consolidation or small pullback within the uptrend. Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. The whole picture, except for some risk that Treasuries pop higher, sets up positive for equities. The charts of the Index ETF’s are not so certain though. The SPY and QQQ both look much better to the upside especially in the longer timeframe but the IWM seems more comfortable in a range for the time being with an upward bias. Use this information as you prepare for the coming week and trade’m well.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

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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