4 Trade Ideas for Honeywell: Bonus Idea

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

Honeywell, $HON, comes into the week approaching short term resistance. It has Bollinger Bands® opening to the upside to allow a move. The RSI is rising in the bullish zone with the MACD positive and moving up. There is resistance at 202 and above that it will breach the 200 day SMA. There is resistance above at 205 and 210 then 213 and 216 before a gap to fill to 221. Support lower is at 198 and 194. Short interest is low at 1.5%. The stock pays a dividend with an annual yield of 2.39%.

The company is expected to report earnings next on February 4th. The January options chain has highest open interest at the 180 put strike and at the 210 strike on the call side. In the February chain open interest is just getting started with the bulk being between the 200 and 220 strikes on the call side. The March chain has biggest open interest at the 200 put strike, then at the 210 and 280 call strikes.

Honeywell, Ticker: $HON

Trade Idea 1: Buy the stock on a move over 202 with a stop at 194.

Trade Idea 2: Buy the stock on a move over 202 and add a January 200/195 Put Spread ($2.30) while selling the February 220 Calls ($1.10).

Trade Idea 3: Buy the January/February 210 Call Calendar ($3.45) while selling the February 185 Put ($2.00).

Trade Idea 4: Buy the March 185/210/230 Call Spread Risk Reversal ($2.00).

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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 December Quad Witching in the books, equity markets showed some strength at the end of the week to stop the drop.

Elsewhere, look for Gold to continue the uptrend and challenge the all-time high while Crude Oil holds lower on the verge of shifting to a downtrend. The US Dollar Index continues the short term drift to the upside in consolidation while US Treasuries continue in consolidation and looking better lower. The Shanghai Composite looks to continue the pause in the uptrend after some digestion from the 10 year highs while Emerging Markets hold up in their uptrend.

The Volatility Index looks to continue to hold in the normal range making it easier for equities to move higher. The charts of the SPY, the IWM and the QQQ look strong on the longer timeframe, with the IWM leading. On the shorter timeframe the SPY, the QQQ and the IWM look to have weathered the storm and maybe ready to start higher again. 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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