4 Trade Ideas for Progressive: Bonus Idea

Progressive, $PGR, comes into the week rounding higher after a pullback. It ended Friday at the 50 day SMA. The round higher made for a higher low. This occurred with the RSI making a lower low, a phenomenon known as a Positive RSI Reversal. This gives a target to 273. That RSI is rising back towards the midline with the MACD leveling after a pullback into negative territory. There is resistance at 254 and 257 then 260 and 264 before 270. Support lower is at 247.50 and 243 before 240. Short interest is low under 1%. The stock pays a dividend with an annual yield of 0.16% and has an ex-date of January 9th.

The company is expected to report earnings next on January 29th. The December options chain shows open interest is biggest at the 250 put strike then 230 and 240. On the call side it is spread from 230 to 275. The January chain has biggest open interest at the 250 put strike and the 220 then 260 strikes on the call side. Finally, the February chain covers the earnings report and has biggest open interest at the 250 and 245 strikes on the put side. There is much less open interest on the call side but it builds from 235 to a peak at 260 then tails to 285.

Progressive, Ticker: $PGR

Trade Idea 1: Buy the stock on a move over 254 with as stop at 240.

Trade Idea 2: Buy the stock on a move over 254 and add a January 250/240 Put Spread ($5.10) while selling the February 265 Calls ($4.80).

Trade Idea 3: Buy the January/February 260 Call Calendar ($4.00) while selling the January 240 Put ($3.50).

Trade Idea 4: Buy the February 235/255/270 Call Spread Risk Reversal (30 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 just 10 trading days left in the year, saw equity markets continue to show strength on the large cap and tech front, with some weakness appearing in small caps.

Elsewhere look for Gold to continue its consolidation in the uptrend while Crude Oil consolidates in the lower end of a broad range. The US Dollar Index continues the short term move to the upside while US Treasuries hold in consolidation. The Shanghai Composite looks to consolidate in the uptrend while Emerging Markets continue the short term move higher.

The Volatility Index looks to remain very low and stable making the path easier for equity markets to the upside. Their charts look strong, especially on the longer timeframe, with the small cap IWM showing some downside risk. On the shorter timeframe the QQQ has been the short term leader and looks to continue while the SPY consolidates at the high and the IWM pullback looks to deepen. 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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