Top Trade Ideas for the Week of March 5, 2012: The Rest Premium

• Posted by Greg Harmon
• on March 4th, 2012

Here are the Rest of the Top 10 with Premium Content in Bold:

Athenahealth, Ticker: $ATHN

Athenahealth, $ATHN, is consolidating at the September high after a move up off of the plateau at 66 within the longer run higher from 49. The Relative Strength Index (RSI) is a bit extended in the low 70s but bullish and the Moving Average Convergence Divergence (MACD) indicator is positive but fading. Both reflect a need for the consolidation that is occurring. A break of the consolidation higher brings a Measured Move to 78. The short interest is high in this name at about 25% so be careful shorting on a breakdown. Support below 66 comes at 61-61.50 and then 58. Enter long on a move over 72 using a $1.50 trailing stop. Take off 1/2 at 78 and tighten the stop to 75 cents. Options are thinly traded and wide in this name. You could sell the April 60 Puts for some premium to enhance your trade on the break higher but anything else looks dangerous. On a move under 70 enter short with a 75 cent trailing stop. Take 1/2 off at 66.

Ctrip.com, Ticker: $CTRP

Ctrip.com, $CTRP, is consolidating at resistance at 28 after rising from the Triple Bottom at 22.55. Over the resistance the gap from November looms large but offers a good reward. The RSI is bullish and the MACD is positive and rising, both supporting more upside. Resistance comes at 30.58 and 32 followed by 33.78 and 36.60. Support is found at 25.50 and 24 before the bottom. Enter long on a move over 28 with a 60 cent trailing stop. Take of 1/3 at 30.50 and another 1/3 at 33.78. As a options trade consider the March 29 Calls (offered at 50 cents late Friday) on a the same trigger, stop and targets as the stock trade. Alternatively you might buy the April 29/31 Call Spread (70 cents) and consider selling the April 25 Put (65 cents) on the same trigger for a near free Call Spread Risk Reversal. Selling the Puts for premium also works.

Dow Chemical, Ticker: $DOW

Dow Chemical, $DOW, is in a long consolidation channel with tightening Bollinger bands just over the target of the move out of the symmetrical triangle from November and December at 33. This was also the scene of a long period of previous consolidation from May through too August of 2011. The RSI remains bullish and is pointing higher but has been trending lower. A caution, and the MACD is negative and holding fairly steady. Watch the gaps on a break lower and over 35 look for a move to the previous high. Resistance on the move higher is found at 36.40 and 38.25 followed by 40.70. The Measured Move higher takes it to the previous top. Support lower is found at the gaps from 30.80 to 30.52 and 29.27 to 28.86 followed by 28. Enter long on a move over 35 with a 70 cent trailing stop and tighten to 40 cents on a touch at 36.40, taking off 1/3 at 38.25 and another 1/3 at 40.70. As an options trade consider the April 35 Calls (84 cents) on a move over 34.50 and then trade them like the stock trade above. You can also sell the April 30 Puts (32 cents) on that trigger over 35 to reduce the cost or as a solo trade. On a break below 33.50 enter short with a 50 cent trailing stop. Take off 1/3 at 30.50 and another 1/3 at 28.86.

IntercontinentalExchange, Ticker: $ICE

IntercontinentalExchange, $ICE, is building a bull flag after a strong move higher, working off a technically overbought condition. The RSI is slow to fade, strong, and a the MACD is about to cross positive, a diverging signal. The long upper shadow Friday adds some weight to the caution from the MACD. A move up over the flag has a Measured Move to 147.50 and a breakdown has support at the previous flag. Resistance higher over 140.50 goes back to 2008 at 151, 161 and 167. Support lower under 137.50 comes at 135 and 132.25 followed by 128 and 126 before 123. Enter long over 140.50 with a $3 trailing stop. Take off 1/3 on a move to 147.50 and tighten the stop to $1.50, taking off another 1/3 at 151. The options strikes are wide. Consider the March 140/145 Call Spread ($2.35) on the same trigger above if it happens early in the week, other wise use the April Expiry ($2.70) after Wednesday. To greatly improve the reward to risk ratio sell the 130 Strike Put in April ($1.85) to fund it. On a move under 137.50 enter short with a $2 trailing stop, taking off 1/3 at 132.50 and another 1/3 at 126. The April 135/125 Put Spreads ($2.35) look to be the best way to play a move lower with options.

Occidental Petroleum, Ticker: $OXY

Occidental Petroleum, $OXY, has been in a tight consolidation range for 3 weeks. The Bollinger bands are getting tighter than gastric band foretelling a move very soon. The RSI is bullish and holding while the MACD is near zero offering no real signal. A break over consolidation and then 107.50 releases the hounds. A move under 102.50 has support noted. A sharp break triggers a target of 122.50. Support lower is at 101 and 98 followed by 95.60, 93 and 87. Enter long on a move over 105.60 for a quick $2 with a very tight stop at 104.50. As it breaks over 107.50 convert the stop to $1.50 trailing stop and take off 1/3 at 110. Take off another 1/3 at 120. As an options trade buy the April 110 Calls ($1.36) on the same trigger as the stock trade and use the stops and targets for profits. You could also sell the April 97.5 Puts ($1.74) or 95 Puts ($1.29) to fund the trade or as a solo trade on the same trigger. On a move under 102.50 enter short with a $1 trailing stop. Take off 1/3 at 98 and another 1/3 at 93.

Up Next: Bonus Idea

The Best

If you like what you see sign up for more ideas and deeper analysis using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits feed and on chartly.

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 heading into the first full week of March sees the market still looking strong but showing signs of a needed rest in some areas. Gold, the enigma, looks lower in the very short term but positive on an intermediate and long term basis while Crude Oil is consolidating in an uptrend. US Treasuries remain in their consolidation zone but are looking slightly better to the upside while the US Dollar Index appears to have found a bottom and ready to work higher as well. The Shanghai Composite and Emerging Markets both continue to look higher into next week. Volatility looks biased to the downside but has little room lower, while it certainly does not look ready to turn higher. These influencers set the stage for the US Equity Indexes to consolidate within their uptrend. A move lower by the US Dollar Index or Treasuries should change that to continue the rally higher. The charts of Equity Indexes are mixed though. The QQQ remains very strong while the SPY is starting to look ready to consolidate and the IWM may pullback. A hard move higher by the QQQ or lower by the IWM, dragging the SPY with either could set the direction for the next few weeks. 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.

blog comments powered by Disqus