Top Trade Ideas for the Week of January 28, 2013: Bonus Idea

• Posted by Greg Harmon
• on January 28th, 2013

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

American Express, Ticker: $AXP

American Express, $AXP, gapped higher with the market at year end and marched to a peak at 62. pulling back since then in earnings news it has held at the 20 day Simple Moving Average (SMA) and is starting t turn higher. It has a Relative Strength Index (RSI) that also held at the mid line and is rising again, bullish, and a Moving Average Convergence Divergence indicator (MACD) that is negative, but stalled. Support is found at 59 and then 57.50 followed by 56 and 53. the Measured Move higher takes it to 65 with only 62 in the way as previous resistance.

Trade Idea 1: Buy the stock on a break over 59.70, Friday’s high, with a stop at 58.70.

Trade Idea 2: Buy the February 60 Calls (offered at 62 cents late Friday) on a break over 59.70.

Trade Idea 3: Buy the March 60 Calls ($1.08) on a break over 59.70.

Trade Idea 4: Buy the March 55/60 bullish Risk Reversal (82 cents) on a break over 59.70.

Trade Idea 5: Buy the March 60/62.5 Call Spread (69 cents) on a break over 59.70.

Trade Idea 6: Buy the March 60/62.5 Call Spread Risk Reversal selling the March 55 Put (43 cents) on a break over 59.70.

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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 moving into the last week of January sees the markets still strong but getting a little cautious. Gold and Crude Oil are consolidating with Gold better lower while Crude Oil is better higher. The US Dollar Index shows no signs of changing its sideways movement while US Treasuries are biased lower. The Shanghai Composite and Emerging Markets are consolidating in their uptrends with the Shanghai Composite the best bet for a pullback in the near term. Volatility looks to remain at unusually low levels keeping the bias for the equity index ETF’s higher. The SPY and IWM may be ready to turn over the leadership to the QQQ, as both are becoming overbought. Use this information as you prepare for the coming week and trad’em well.

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Dragonfly Capital Views Performance Through January 2013 Expiry

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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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