Top Trade Ideas for the Week September 26, 2016: Bonus Idea

• Posted by Greg Harmon
• on September 26th, 2016

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

Amgen, $AMGN, moved higher out of a 2011 consolidation rising for more than 3 years before running out of steam. The move increased the stock by more than 240% from a low of 50 to over 170. Since December 2014 the stock price has done nothing. Or at least that is how it appears.

When an Andrews’ Pitchfork is applied a different story emerges. With this view the stock has settled at the Lower Median Line and started riding it higher again. The run higher from the late June low had it moving toward the Median Line and it seems to have bogged down between the two for now. This shows a positive trend higher.

Looking left into 2015 sees the current pause is coming at prior resistance. With a touch there in August it had a shallow pullback and then jumped back last week. A push through would give a target to 200.

The momentum indicators support more movement higher too. The RSI is bullish and rising while the MACD is turning back up, avoided a cross down. It has resistance above at 177 and then just free air above. Support lower comes at 167 and 164 before 152 and 145. Short interest is low at 1.1% and the company is expected to report earnings next October 27th. The stock currently pays a $4.00 dividend, a 2.29% yield.

Options open interest in between now and that report show a bias to the upside. The October 28 Expiry options show light open interest. November options show an upward bias but also light open interest. In January 2017 the picture is mixed.

Amgen, Ticker: $AMGN

Trade Idea 1: Buy the stock on a move over 177 with a stop at 167.

Trade Idea 2: Buy the stock on a move over 177 and add a October 28 Expiry 175/165 Put Spread ($3.00) for protection and sell a November 180 Covered Call ($3.00) for a free Collar.

Trade Idea 3: Buy the November 165/175/180 Call Spread Risk Reversal (20 cent credit).

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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 September sees the Equity Indexes looking strong, especially on the longer timeframe.

Elsewhere look for Gold to move higher short term in consolidation while Crude Oil consolidates. The US Dollar Index also looks to continue to move sideways while US Treasuries are biased higher. The Shanghai Composite looks to drift higher while Emerging Markets are biased to the downside in the short term.

Volatility looks to remain at abnormally low levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts show strength in moving higher at the end of the week, especially in the longer timeframe. 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.

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