4 Trade Ideas for BorgWarner: Bonus Idea

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

BorgWarner, $BWA, bottomed with the market in March. The stock price rose from there in a steady trend until a blow off gap higher as it broke above the 200 day SMA in June. It pulled back and consolidated under the 200 day for a month before resuming the uptrend and topping out in September. Since then, it has been in a consolidation and finally rounded out of it last week. On a large scale this gives a target on an AB=CD to 60. That would put it within 15% of the all-time high from 2014.

The RSI is back into the bullish zone for the first time since early September with the MACD positive and rising. The Bollinger Bands® have opened to allow the move higher. There is resistance at 44 and then 45.40 and 46.25 before 48.50 and 51 then 52.75 and 54.25. Support lower comes at 42 and 40.50 before 39 and 37.80 then 36.30 and 34.80. Short interest is elevated at 7%. The stock pays a dividend with a 1.59% annual yield and has been trading ex-dividend since November 30th. The company is expected to report earnings next on February 11th.

The February options chain shows the open interest focused at 35 and 37.50 on the put side and then between 40 and 45 on the call side. The at-the-money straddle suggests traders are looking for a $3.85 move in the stock price by expiration. March options are focused at the 37.50 strike on both sides with the calls outnumbering the puts by 15 to 1. The April options are spread from 25 to 40 and small on the put side with a very large chunk at the 37.50 strike on the call side.

BorgWarner, Ticker: $BWA

Trade Idea 1: Buy the stock on a move over 44 with a stop at 41.80.

Trade Idea 2: Buy the stock on a move over 44 and add a February 42.50/40 Put Spread ($1.05) while selling the April 50 Calls (95 cents).

Trade Idea 3: Buy the February/April 50 call Calendar (60 cents) and sell the February 37.50 Put (25 cents).

Trade Idea 4: Buy the April 45/50 Call Spread And sell the April 37.50 Put for 30 cents.

Premium Content

The Best

The Rest Premium

Free Content

The Rest

If you like what you see sign up for more ideas and deeper analysis using the Get Premium button above.   

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 week to go in January, sees equity markets remaining strong.

Elsewhere look for Gold to possibly reverse higher out of its pullback while Crude Oil continues to move up. The US Dollar Index continues it downtrend while US Treasuries consolidate in their move lower. The Shanghai Composite looks to continue higher after making 5 year highs while Emerging Markets print all-time highs, not seem in over 13 years as they continue to move up.

The Volatility Index looks to remain low and stable making the path easier for equity markets to the upside. Their charts look strong, especially on the longer timeframe. On the shorter timeframe both the QQQ and SPY have resumed their paths higher, while the IWM is taking a breather at new all-time highs. 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.

blog comments powered by Disqus
Dragonfly Caps Blog