Top Trade Ideas for the Week of December 19, 2011: Bonus Idea

• Posted by Greg Harmon
• on December 19th, 2011

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

Boston Beer, Ticker: $SAM

Boston Beer, $SAM, is consolidating in a bull flag between 100 and 104 after breaking over 100. It has a bullish Relative Strength Index (RSI) that has stayed that way since rising off of the October low. The Moving Average Convergence Divergence (MACD) indicator is negative but near zero and improving toward a positive cross, supporting upside. The 50 day Simple Moving Average (SMA) made a Golden Cross, up through the 200 day SMA, 3 weeks ago just prior to breaking 100, and the price is above all the SMA’s. There is support below 100 at 96.80 followed by 95 and 94. A break of the flag higher has a Measured Move to 114 and based on history could take a couple of weeks to get there. With that here are a six pack of ideas…..

Trade Idea 1: Buy the stock on a break over 104 with a $2 trailing stop.

Trade Idea 2: Buy the January 105 Calls on a break over 104.
this risks roughly the same capital as buying the stock with a $2 stop but with a delta of 40 will participate at only 40% of the upside pace in the first week. As it gets closer to Expiry, if in the money, it will participate faster as the delta rises.

Trade Idea 3: Sell the January 100 Puts on a break over 104.
This will collect about 1.50 in premium and is a bet that the price will not fall below 100 by Expiry. If it does you will be put the stock.

Trade Idea 4: Sell the January 95 Puts now or on a pullback within the flag.
This offers greater protection from owning the stock on a fall than Trade Idea 3, all the way down to 95 from but will only take in about 55 cents in premium.

Trade Idea 5: Buy the January 105/100 Bull Risk Reversal on a move over 104.
A combination of Trade ideas 2 and 3, was offered at 40 cents late Friday and likely to be had for less than 65 cents on a move to 104. This allows participation on the upside call sooner with less capital outlay but with the risk of owning the stock if it closes under 100 at Expiry.

Trade Idea 6: Buy the January 105/95 Bull Risk Reversal.
A combination of Trade Ideas 2 and 4, was offered for 1.45 late Friday. This allows participation on the upside call sooner with less capital outlay but with the risk of owning the stock if it closes under 95 at Expiry.

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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 as we head into the last two weeks of the year as Gold still looks broken from its move and poised for more downside while Crude Oil is also broken and biased lower. US Treasuries and the US Dollar look to continue to drive the direction of the markets crushing Equities as they move higher. The Shanghai Composite, which has been playing a supporting role in moving Equities lower, looks to continue to do so long term but might consolidate the last leg down in the short run first. Emerging Markets look to pay the price lower as well. Volatility is poised to continue to drift lower supporting an orderly move. All this sets up for the Equity Index ETF’s, SPY, IWM and QQQ, to move lower in the coming week, and the short term charts agree. 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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