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

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

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

IBM, Ticker: $IBM

IBM, $IBM, dropped dramatically following their earnings report, finally finding a bottom last week as it consolidated over 161.50. The bounce higher is gaining some momentum as the RSI is pushing higher off of an oversold bottom at 20 and the MACD is about to cross up, a buy signal. There is resistance at 169 and the prior triple bottom at 172.60 before a gap to fill to 180. Short interest will not really help at under 3%.

Trade Idea 1: Buy the stock with a stop at 161.50.
A straight play for more upside against the low as a stop.

Trade Idea 2: Buy the November 7 Expiry 165 Calls (offered at 90 cents late Friday).
A defined risk low capital way to play for short term upside.

Trade Idea 3: Buy the November 7/November 165 Call Calendar (83 cents).
This gives longer term upward potential recognizing the large open interest this week at 162.50.

Trade Idea 4: Buy the November 162.5/November 14 165 Call Diagonal ($1.80).
This gives longer term upside, if the price breaches 165 by November 14 then you will need to buy back the short calls and resell November upside calls for a call spread.

Trade Idea 5: Buy the November/December 170 Call Calendar selling the November 7 160 Puts (46 cents).
This is an intermediate term long position with short term downside risk.

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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 the calendar turns to November, sees the equity markets are looking higher. Elsewhere look for Gold to continue lower while Crude Oil consolidates, watching for a reversal. The US Dollar Index looks to continue higher to new multi-year highs while US Treasuries are biased lower in consolidation. The Shanghai Composite and Emerging Markets are biased to the upside with China looking very strong. Volatility looks to remain subdued after the pullback keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts show great strength ion the weekly timeframe with some potential exhaustion signals in the short run. 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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