Top Trade Ideas for the Week of May 27, 2014: Bonus Idea

• Posted by Greg Harmon
• on May 27th, 2014

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

Wells Fargo, Ticker: $WFC

Wells Fargo, $WFC, is poking through the top of a consolidation channel between 48.80 and 50. It has support for more upside from a rising RSI in the bullish zone and a MACD that crossed up and is rising. The Bollinger bands are also rising as are the SMA’s on the 50, 100 and 200 day timeframes. The price action has also traced out an ascending triangle since early February that carries a target of 55.85. There is no resistance higher and support lower may come at 50 and 48.80 followed by 48.30 and 47.30.

Trade Idea 1: Buy the stock now (over 50) with a stop at 48.75.

Trade Idea 2: Buy the June 50 Calls (offered at 73 cents late Friday) on the same trigger.

Trade Idea 3: Buy the July 47/52.50 Bullish Risk Reversal (buy the 52.50 Call and sell the 47 Put, 2 cents).

Trade Idea 4: Buy the May 30/July 3 Expiry 50.50 Call Calendars (buy July and sell May, 55 cents).

Trade Idea 5: Buy the July 3 Expiry 50.50/52.50 call Spreads (56 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, as we kick off summer and head into the shortened Holiday week sees the equity markets looking solid and positive. Elsewhere Gold looks stuck in a holding pattern while Crude Oil continues to rise. The US Dollar Index and US Treasuries are both biased higher. The Shanghai Composite is doing a good job of holding support but showing no signs of strength while the Emerging Markets are biased to the upside. Volatility looks to remain subdued and biased lower keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts agree with the SPY and QQQ looking strong on both timeframes while the IWM lags on the weekly timeframe. The Dollar, Treasuries and Oil moving higher will cause many to raise caution on equities as they do not all move together in theory. But they can advance for long period before any change. Stick to what the price action is saying. Use this information as you prepare for the coming week and trad’em well.

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