Top Trade Ideas for the Week of October 24, 2016: The Rest Premium
- Posted by Greg Harmon
- on October 23rd, 2016
Here are the Rest of the Top 10 with Premium Exclusive content in Bold:
BP, Ticker: $BP
BP, $BP, has trend higher since finding support over the first two months of the year. It spike up in July only to fall back to the rising trend, finding support at the 100 day SMA. The latest push higher off of that 100 day SMA stopped just shy of the July peak but then only pulled back a small amount before revering higher. A higher low. Friday saw a push to the upside out of consolidation. The RSI is now in the bullish zone and the MACD is flat after a small pullback. Look for continuation higher to participate to the upside. The price action since July traced out a bearish Bat harmonic, and it retraced 38.2% of the pattern after hitting the Potential Reversal Zone (PRZ) October 10th. A Measured Move to the upside would give a target to 39. And over 38 triggers a very large Cup and Handle with a target to 47. There is resistance at 36.70 and 37.25 followed by 38 and 39, then 40.30. Support lower comes at 35.50 and 34.60 followed by 33.50. Short interest is low under 1%. Enter long on a move over 36.50 with a stop at 35. As it moves over 37.25 move the stop to break even and then to a $1 trailing stop over 37.50. Take off 1/3 on a stall at 47 or higher. As an options trade consider the October 28 Expiry 36.50 Calls (offered at 25 cents late Friday) and trade them like the stock trade (using the stock price as a trigger, stop and target). Add leverage by selling the October 28 Expiry 35.5 Puts (12 cents) for a bullish Risk Reversal.
Blackstone, Ticker: $BX
Blackstone, $BX, ran up over its 200 day SMA in August and stayed there for a month. From there it fell back though, unable to hold bullish. It seems to have found a bottom last week though, and turned back higher Friday. The RSI also turned up, out of oversold territory as the MACD is about to cross up. Look for continuation Monday to participate to the upside. The move lower stalled right at the Measured Move to the downside adding weight to the reversal bid. There is resistance above at 24.85 and 25.50 followed by 26.50 and 27.25 before 28.35. Support lower comes at 23.40 and 22.80. Short interest is low at 1.5%. Enter long now (over 23.75) with a stop at 23.25. As it moves over 24.70 move the stop to a 65 cent trailing stop and take off 1/3 on a stall at 28.35 or higher. As an options trade consider the October 28 Expiry 24 Calls (42 cents) and trade them like the stock trade. The company is expected to report earnings October 27th.
Nordstrom, Ticker: $JWN
Nordstrom, $JWN, moved higher off of a base made through June and July. It pushed above the 200 day SMA in August and has held there since. It went sideways in consolidation until the end of September and then pushed higher. This move led to a pullback though in a bull flag. The price broke that flag to the upside Friday. The RSI is in the bullish zone and the MACD slowly falling but positive. Look for continuation to participate to the upside. The pullback and bounce retested the break above trend resistance, now acting as support, and held. This continues to have a target on a Cup and Handle to 70. There is resistance at 55.20 and 58 followed by a gap to fill to 62.20 then 67.25 and 69. Support lower comes at 52.60 and 50.80 followed by 49. Short interest is high at 29.5%. Enter long now (over 52.60) with a stop at 49. As it moves over 55.20 move the stop to break even and then to a $2 trailing stop over 56. Take off 1/3 on a stall at 70 or higher. As an options trade consider the November 52.50 Calls ($3.65) and trade them like the stock trade. Sell the November 50 Puts ($1.07) to lower to cost and add leverage.
Palo Alto Networks, Ticker: $PANW
Palo Alto Networks, $PANW, ran higher off of a bottom in June. It peaked in early October and started to pullback, finding support at its 50 day SMA. Friday saw a push higher off of that 50 day SMA and support for more from a rising RSI, with a MACD starting to slow its drop. Look for continuation Monday to participate to the upside. The Measured Move higher would give a target to 178.50 and that would be near the top of the rising channel as resistance that has been in place since the June low. There is also a bearish Gartley harmonic building with a PRZ at 176.66. Notice as well that the chart has a Golden Cross printed 2 weeks ago, at the top. There is resistance at 155 and 160 before 165 and 173.50. Support lower comes at 146.25 and 142.60. Short interest is elevated at 8.7%. Enter long now (over 147.50) with a stop at 145. As it moves over 152.50 move the stop to break even, and then to a $4 trailing stop over 154. Take off 1/3 on a stall at 176.60 or higher. As an options trade consider the November 150 Calls ($5.20) and trade them like the stock trade. Sell the October 28 Expiry 152.5 Calls (1.20) to lower the cost.
Potbelly, Ticker: $PBPB
Potbelly, $PBPB, had a strong move higher off of a bottom in February, peaking in April. It pulled back slight into May and then moved sideways in consolidation for 6 months. Friday changed that as it broke above the consolidation range. The RSI is in the bullish zone and the MACD rising, both supporting more upside. Look for follow through to participate to the upside. The SMA’s have become very tight, often leading to big moves. A return to the April high at 14.99 would be one of those. There is resistance at 13.75 and 14.70 followed by 15. Support lower comes at 13.35 and 12.80. Short interest is elevated at 7.5%. Enter long on a move over 13.75 with a stop at 13.35. As it moves over 14 move the stop to break even and then to a 35 cent trailing stop over 14.10. Take off 1/3 on a stall at 15 or higher. As an options trade consider the November 13 Calls ($1.10) and trade them like the stock price. Sell the November 14 Calls (35 cents) and or the November 13 Puts (30 cents) to lower the cost and add leverage.
Up Next: Bonus Idea
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 before the election sees equity markets looking stable long term and mixed in the short run with the QQQ leading and the SPY falling.
Elsewhere look for Gold to continue to press higher short term while Crude Oil continues to show its strength. The US Dollar Index is also strong moving higher while US Treasuries are bouncing short term in their downtrend. The Shanghai Composite continues to drift higher while Emerging Markets mark time in consolidation.
Volatility looks to remain subdued and falling, adding a tailwind to the equity index ETF’s SPY, IWM and QQQ. They are mixed short term though with the QQQ moving higher the IWM flat and the SPY at risk for more downside. 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.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded since 1986 and held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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