Top Trade Ideas for the Week of December 17, 2012: Bonus Idea

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

Bank of America, Ticker: $BAC

Bank of America, $BAC, moved above the closely watch resistance at 10 and drove higher. Now consolidating at 10.50 in a bull flag it has a Relative Strength Index RSI that is bullish and running flat along the technically overbought level with a Moving Average Convergence Divergence indicator (MACD) that is positive, but might be stalling. The current level is also the Measured Move target from the September-October ascending triangle break. If it can break the flag higher there is a Measured Move higher to 11.20. Be careful as the Open Interest (OI) in the December Options shows the maximum at the 10 Strike Call and 9 Strike Put, making the maximum options pain level below 10. From a longer view the 3-box reversal Point and Figure chart (PnF) carries a price objective much higher at 20.

Trade Idea 1: Buy the stock on a move over 10.60 with a stop at 10.47.

Trade Idea 2: Buy the December 10.50 Calls (offered late Friday at 21 cents) on the same trigger.

Trade Idea 3: Buy the January 4 Expiry, 10.50 Strike Calls (34 cents) on the same trigger.

Trade Idea 4: Buy the December28/February 11 Call Calendars (28 cents) and continue to sell weekly 11 Strike Calls if the price does not rise.

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After reviewing over 1,000 charts, I have found some good setups for the week. This week’s list contains the first five below to get you started early. {+++}These were selected and should be viewed in the context of the broad Market Macro picture reviewed Saturday which, heading into the last full week of the year, sees there is still a bit of a cloud over the markets. Gold is biased lower within the long term neutral trend, with Crude Oil looking steady with a bias to the downside on a move out of the range. The US Dollar Index is biased to the downside if it breaks the tight range with US Treasuries looking lower in the uptrend. The Shanghai Composite is looking strong in the downtrend with Emerging Markets strong but perhaps ready for a rest. The Volatility Index is showing no fear anytime soon keeping the bias higher for the Equity Index ETF’s SPY, IWM and QQQ. Their charts show some caution if not a pullback coming with the QQQ biased lower and weakest. Use this information as you prepare for the coming week and trade’m well.

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Dragonfly Capital Views Performance Through November 2012 Expiry

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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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