4 Trade Ideas for General Electric: Bonus Idea

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

General Electric, $GE, comes into the week sitting near support after pulling back from a second touch near 118. Since the gap up in July the price action has resembled a consolidation channel. The RSI is diverging lower though and on the edge of a move into the bearish zone. The MACD has turned negative and is dropping. Should it break the channel a 38.2% retracement of the full leg higher would be to 91.35, where it consolidated for 2 weeks in March.

Despite the negative momentum divergence this stock has exhibited tremendous relative strength over the last 2 months compared to the S&P 500 and Nasdaq. There is support at 110 and 107 then 104.50 and 103 before 101 and 98.50. Resistance higher is at 111.50 and 114.50 before 116.50. Short interest is low at 1.1%. The stock pays a dividend with an annual yield of 0.29% and has traded ex-dividend since September 25th.

The company is expected to report earnings next on October 24th. The October options chain shows very large open interest at the 110 strike on the put side and the 115 strike on the call side. The November chain is just starting to build with biggest open interest at the 110 put and 120 call strikes. The December chain is also light and biggest at the 90 put and 105 and 110 calls.

General Electric, Ticker: $GE

Trade Idea 1: Sell the stock short on a move under 110 with a stop at 116.50.

Trade Idea 2: Sell the stock short on a move under 110 and add a November 115 Call ($3.20) while selling the December 95 Put ($1.07).

Trade Idea 3: Buy the December 105 Put and sell the November 100 Put ($1.92).

Trade Idea 4: Buy the November 110/115 Strangle ($7.40).

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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 the 3rd Quarter in the books, saw equity markets continue to show weakness.

Elsewhere look for Gold to continue its short term trend lower while Crude Oil may consolidate in its uptrend. The US Dollar Index continues to trend to the upside while US Treasuries trend lower. The Shanghai Composite looks to continue the slow drift lower while Emerging Markets consolidate in a broad range.

The Volatility Index looks to remain low and stable making the path easier for equity markets to the upside. Their charts look weak on the shorter timeframe, with the QQQ the best at support. On the longer timeframe both the QQQ and IWM are holding in consolidation ranges while the SPY is teasing a continuation lower. 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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