4 Trade Ideas for Honeywell: Bonus Idea

• Posted by Greg Harmon
• on June 5th, 2023

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

Honeywell, $HON, comes into the week approaching resistance. It is consolidating around the flat SMA’s after retracing 61.8% of the last leg higher. The RSI is at the top of the non directional range and near a move into the bullish zone with the MACD crossing to positive. There is resistance at 200 and 204 then 207 and 209.50 before 211 and 217. Support lower comes at 196 and 191. Short interest is low under 1%. The stock pays a dividend with an annual yield of 2.07% and has traded ex-dividend since May 11th.

The company is expected to report earnings next on July 26th. The June options chain shows open interest building from 200 to a peak at 190 then tailing on the put side. On the call side it is focused at 210. The July chain has open interest focused at the 185 put strike and much lighter from 195 to 210 on the call side. The September chain is the first to cover the earnings report and has biggest open interest at the 185 and 200 put strikes, but double that size at the 210 call.

Honeywell, Ticker: $HON

Trade Idea 1: Buy the stock on a move over 200 with a stop at 195.

Trade Idea 2: Buy the stock on a move over 200 and add a July 195/185 Put Spread ($2.10) while selling the September 220 Call ($1.25).

Trade Idea 3: Buy the July/September 210 Call Calendar ($2.80) while selling the July 185 Put ($1.20).

Trade Idea 4: Buy the September 210/185 Bullish Risk Reversal (80 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 the month of May in the books, saw equity markets showed strength as they moved into June.

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

The Volatility Index looks to remain very low and stable as it sits at the lowest level in over 3 years, making the path easier for equity markets to the upside. Their charts look strong, especially the SPY and QQQ, but now the IWM joining them. On the shorter timeframe the QQQ is venturing into overbought territory and may need a pause while the SPY and IWM look ready to take over leadership if that is the case. The longer timeframe shows the SPY ready to overtake the August highs, joining the QQQ while the IWM breaks a long range higher. 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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