4 Trade Ideas for Eaton: Bonus Idea

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

Eaton, $ETN, comes into the week pushing over short term resistance and into the gap from the start of August. It moved over the 50 day SMA Friday as well. The Bollinger Bands® are opening higher after a squeeze with the RSI rising in the bullish zone and the MACD about to cross to positive. There is resistance at 372.50 and 383.50 then 400. Support lower is at 364 and 359 then 356 and 351. Short interest is low at 1.8%. The stock pays a dividend with an annual yield of 1.14% and has traded ex-dividend since August 7th.

The company is expected to report earnings next on October 29th. The September options chain has biggest open interest at the 360 strike then 350 on the put side. On the call side it is biggest at 380. In the October chain it builds from 390 to a peak at 330 then fades to 270 on the put side. The call side of that chain has biggest open interest at the 360 strike, then 370 and 390. Finally, in the November chain open interest is just starting to build and is low on both sides.

Eaton, Ticker: $ETN

Trade Idea 1: Buy the stock on a move over 368 with a stop at 350.

Trade Idea 2: Buy the stock on a move over 368 and add an October 350/340 Put Spread ($2.50) while selling the November 430 Call ($2.10).

Trade Idea 3: Buy the September/October 380 Call Calendar ($6.20) while selling an October 340 Put ($3.50).

Trade Idea 4: Buy the November 340/370/400 Call Spread Risk Reversal ($3.30).

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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 September FOMC meeting, saw equity markets were rocking, making new highs as the focus had shifted toward addressing labor and away from inflation data.

Elsewhere, look for Gold to continue the uptrend to new highs while Crude Oil drifts in consolidation. The US Dollar Index continues to run sideways in consolidation, while US Treasuries may be in the early stages of reversing their downtrend. The Shanghai Composite looks to continue the uptrend to new 10 year highs while Emerging Markets also continue their uptrend at 4 year highs.

The Volatility Index looks to continue to hold at low levels, making life easier for equity markets to the upside. The chart of the SPY continues to look strong on both timeframes, closing at an all-time high with the QQQ negating its warning sign and also at new highs. The IWM remains the laggard, but strong on both timeframes, and at a 10 month high, just short of its top. 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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