Top Trade Ideas for the Week of December 16, 2013: Bonus Idea

• Posted by Greg Harmon
• on December 16th, 2013

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

American International Group, Ticker: $AIG

American International Group, $AIG, gapped lower to the rising support line after October earnings. Consolidating along that line it has been building a horizontal resistance at 50, creating an ascending triangle. A break over 50 targets 52.60, the previous high, on a Measured Move. There is no resistance above that but the rising trend resistance would come into play at 54.75-55. Support lower is found at 48.40 and then 47.60 followed by 46. Both the Relative Strength Index (RSI) and the MACD have been slowly trending higher, supporting an upside advance, and the tight Bollinger bands suggest it could come soon.

Trade Idea 1: Buy the stock on a move over 50 with a stop at 49.40.

Trade Idea 2: Buy the January 50 Calls (offered at $1.23 late Friday) on the same trigger.

Trade Idea 3: Buy the January 50/December 27th 51 Call Diagonals (91 cents, buy January and sell December).

Trade Idea 4: Sell the January 48 Put (66 cent credit) on a move over 50.

Trade Idea 5: Buy the January 50/December 27th 51 Call Diagonals and sell the January 48 Put (25 cents).

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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, heading into the last full week before the Holidays, sees the markets looking tired and extended and better lower. Look for Gold to continue lower while Crude Oil turns the bias to lower in the short term. The US Dollar Index is trending lower but may be ready for a bounce while US Treasuries are biased lower. The Shanghai Composite is consolidating in the upward move and Emerging Markets are biased to continue to the downside. Volatility looks to remain subdued but with an upward bias keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts suggest that there may be more downside for the QQQ and SPY, which are both at support, while the IWM creeps along trend support higher in what could still be a bear flag. Use this information as you prepare for the coming week and trad’em well.

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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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