Top Trade Ideas for the Week of February 3, 2014: Bonus Idea

• Posted by Greg Harmon
• on February 3rd, 2014

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

Berkshire Hathaway, Ticker: $BRK.B

Berkshire Hathaway, $BRK.B, has been moving sideways in a consolidation channel between 109.80 and 119.20 since May. Currently it is testing minor support at 111 and the Bollinger bands are opening lower. The Relative Strength Index (RSI) is also turning back lower with a falling MACD. Finally it is below the 200 day Simple Moving Average (SMA) since Christmas…….2011. There is support lower at 111 and 109.80 followed by 107.25 and 105.50 before 103 and 101.60. Resistance higher is found at 113.50 and over that forget about this trade for now.

Trade idea 1: Short the stock on a move under 109.80 with a stop at 111.

Trade idea 2: Buy the February 110 Puts (offered at 89 cents late Friday) and trade them like the stock.

Trade idea 3: Buy the February/March 105 Put Calendars (51 cents).

Trade idea 3: Buy the February/March 105 Put Calendars and sell the March 100 Puts (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 February sees the equity markets are all moving together and look better lower. Look for Gold to consolidate and possibly reverse lower while Crude Oil continues its rise. The US Dollar Index looks better to the upside while US Treasuries are remain biased higher with significant resistance nearby. The Shanghai Composite looks to be consolidating and may be ready to move higher while Emerging Markets are also consolidating but with a downside bias. Volatility looks to remain low but creeping up to important levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ, but with very little strength. Their charts show that the SPY is the weakest and looks to continue lower while the IWM is next and then the QQQ the strongest, but only looking at best to consolidate and likely to pullback too. Use this information as you prepare for the coming week and trad’em well.

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