Top Trade Ideas for the Week of December 5, 2011: Bonus Idea

• Posted by Greg Harmon
• on December 5th, 2011

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

VirnetX Holdings, Ticker: $VHC

VirnetX Holdings, $VHC, is moving higher towards resistance at 23.45. This has been historical resistance/support as well as the extended center-line of the previous symmetrical triangle. As it is moving higher the Relative Strength Index (RSI) is trending higher after holding bullish over 40 on its fall. The Moving Average Convergence Divergence (MACD) indicator crossed bullishly positive on Friday as well. Also note that the 3 up days since the bottom have happened on higher volume and that volume has been increasing. There is resistance above 23.45 at 26.65 and a gap at 26.76 to 26.90 followed by resistance at 29.50 and 32.00. Support after that move higher will come at 22.40 followed by 21.23, 20.00 and 18.00. It also has high short interest at over 20%.

Trade Idea 1: Enter long on a move over 23.45 with a 2% trailing stop. Take off 1/3 at 26.65 and another 1/3 at 29.50.

Trade Idea 2: Buy the December 24 Calls on the same trigger over 23.45. These were offered at 90 cents near the close Friday.

Trade Idea 3: Buy the December 24/28 Call Spread on the same trigger over 23.45. Buying the December 24 Call and selling the December 28 Call. This was offered for about 65 cents late Friday.

Trade Idea 4: Buy the December 24/28 Call Spread Risk Reversal shorting the December 19 Put on the same trigger over 23.45. Buying the December 24 Call and selling the December 28 Call to create the Call Spread and funding it by selling the December 19 Put. This was offered for about 15 cents late Friday.

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After reviewing over 900 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 Saturday which looked heading into next week very strong, despite the pullback Friday. Gold and Crude oil both are poised to move higher with a chance that Gold consolidates its gains. The US Dollar and US Treasuries are still in uptrends but facing support levels nearby that could change the trend. The Shanghai Composite looks very broken while Emerging Markets are ready to continue higher. Volatility looks to remain in a trend lower but may consolidate. All this leads to an environment for the Equity Index ETF’s SPY, IWM and QQQ to continue higher. News may again provide exogenous shocks that the charts do not read, but this may show up in the US Dollar and US Treasuries first. Keep watching them as the captains steering the ship. Use this information as you prepare for the coming week and trade’m 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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