4 Trade Ideas to Turn up the Heat in Honeywell: Bonus Idea

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

Honeywell, $HON, broke down from a arising wedge at the end of October. it turned out to be a false break down though as it moved back higher. From false moves come fast moves and the price ran up through the wedge. It gapped up and continued to a top in December. It fell back to retest the gap up level and held at the end of January. Since then, it has consolidated under resistance with the Bollinger Bands® squeezing. It tried to push over Friday, touched the 50 day SMA and then fell back.

The RSI is holding at the mid line trying to move higher with the MACD rising but slightly negative. There is resistance at 204.75 and 209.60 then 213 and 216. Support lower comes at 200.75 and 195.75 then the gap fill to 184.50. Short interest is low under 1%. The stock pays a dividend with an annual yield of 1.83% and begins trading ex-dividend on February 25th. The company is expected to report earnings next on April 29th.

The March options chain has big open interest from 200 down to 180 on the put side, but much bigger size at the 210 call and the 220 call. In the April chain action is just getting started. The June chain is the first to cover the earnings report and shows big open interest at the 165 put. On the call side it is biggest at the 195 strike but large all the way up to 230.

Honeywell, Ticker: $HON

Trade Idea 1: Buy the stock on a move over 205 with a stop at 200.

Trade Idea 2: Buy the stock on a move over 205 and add a March 200/195 Put Spread ($2.00) while selling an April 220 Call ($1.77).

Trade Idea 3: Buy the March/June 210 Call Calendar ($7.45) and sell the April 180 Put ($1.80).

Trade Idea 4: Buy the June 165/210/220 Call Spread Risk Reversal ($2.35).

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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 heading into the last week of February saw equity markets showing some fatigue after strong moves up.

Elsewhere look for Gold to continue its pullback while Crude Oil may consolidate in the uptrend. The US Dollar Index continues to trend lower while US Treasuries continue their downtrend. The Shanghai Composite looks to continue the move higher while Emerging Markets drive for new highs.

The Volatility Index looks to remain low making the path easier for equity markets to the upside. Their charts continue to look strong on the longer timeframe. On the shorter timeframe both the QQQ and SPY are now in consolidation over support with the IWM poised to take the lead after a bounce. 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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