4 Trade Ideas for Honeywell: Bonus Idea

• Posted by Greg Harmon
• on December 16th, 2019

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

Honeywell, $HON, rose from a December 2018 low and met resistance in July. It pulled back from there, retracing 38.2% of the move higher and coinciding with the 200 day SMA, where it found support. A small bounce dropped back to the 200 day SMA again into October. But since then it ran up to a new high in November. Following that high it has digested the move in a falling expanding wedge. But last week it broke that to the upside.

The RSI is rising after a reset lower in the bullish zone and the MACD is curling to cross up and is positive. There is resistance above at 180 and 183. Over that a target to 196 is established on a break out higher. Support lower comes at 174 and 172. Short interest is low at 1.5%. The stock pays a dividend with an annual yield of 2.03% and started trading ex-dividend November 14th. The company is expected to report earnings next on January 30th.

The December options chain shows the biggest open interest at the 170 strike on the put side. On the call side it is spread from 170 to 185, biggest at 180. In the January chain open interest is spread from 140 to 180, biggest at 145 and 160 on the put side. On the call side it is big at 150 and then builds from 160 to 185. The March options have biggest open interest at 160 on the put side and 185 on the call side. Options expiring January 31st open on Monday.

Honeywell, Ticker: $HON

Trade Idea 1: Buy the stock on a move over 180 with a stop at 175.

Trade Idea 2: Buy the stock on a move over 180 and add a January 175/165 Put Spread ($1.93) while selling the January 31 Expiry 185 Calls ($1.38 credit).

Trade Idea 3: Buy the January/March 185 Call Calendar ($2.51) and sell the January 170 Puts ($1.21).

Trade Idea 4: Buy the March 160/180/185 Call Spread Risk Reversal for 25 cents.

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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 full week before the holiday week and options expiration this week, sees equity markets are running higher on all cylinders.

Elsewhere look for Gold to consolidate in a bull flag while Crude Oil moves up in broad consolidation. The US Dollar Index looks to move lower in the short term while US Treasuries pause in their pullback. The Shanghai Composite looks to continue higher while Emerging Markets rise in consolidation.

Volatility looks to remain very low, keep the bias for the equity markets to the upside. Equities are following higher with that weight off of them. The SPY and QQQ, at all-time highs, look to continue higher. The IWM also looks good for more upside as it has broken a 14 month range. 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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