4 Trade Ideas for Capital One: Bonus Idea

• Posted by Greg Harmon
• on September 26th, 2022

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

Capital One, $COF, comes into the week after printing a shooting star doji candlestick Friday. This signals indecision, a possible reversal, at the 61.8% retracement of the post pandemic move higher. It also made a lower low, below the June low, and is outside of the Bollinger Bands®. To confirm the reversal, it would need a move over 95, and preferably a gap up open over 95 and run higher.

The RSI is near oversold with the MACD negative and dropping. The current trend remains lower. There is resistance at 98.50 and 102 then 105.25 and 110 before 113. Support lower comes at 92.35 and then 90.50 followed by 83 and a gap to fill to 79.25. The stock pays a dividend with an annual yield of 2.56% and has traded ex-dividend since August 5th. The company is expected to report earnings next on October 24th.

The October 7 Expiry and October 14 Expiry options chain show decent spreads but little open interest. The October monthly chain shows biggest open interest at the 90 put. The November chain has biggest open interest at the 100 strike then 90 and 80 on the put side, and smaller at the 105 call.

Capital One, Ticker: $COF

Trade Idea 1: Buy the stock on a move over 95 with a stop at 93.

Trade Idea 2: Buy the stock on a move over 95 and add an October 92.50/90 Put Spread ($1.35) while selling the October 101 Call ($1.75).

Trade Idea 3: Sell the stock short on a move under 92 with a stop at 95.

Trade Idea 4: Buy the October 14 Expiry 92/88/85 broken wing Put Butterfly ($1.65).

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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 with one week of trading left in the 3rd Quarter, saw equity markets continue to get pummeled as they re-approach the lows of the year following the September FOMC meeting.

Elsewhere look for Gold to continue its downtrend while Crude Oil continues lower as well. The US Dollar Index continues to push to the upside while US Treasuries pullback in their downtrend. The Shanghai Composite looks to continue the trend lower while the Emerging Markets downtrend persists.

The Volatility Index is elevated and looking to move higher making the path easier for equity markets to the downside. Their charts continue to look weak, especially on the longer timeframe. On the shorter timeframe the IWM, QQQ and SPY could us a reset on momentum measures as all three are extended to the downside. All three continue to trade in lockstep.  Use this information as you prepare for the coming week and trad’em 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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