Top Trade Ideas for the Week November 10, 2014: Bonus Idea

• Posted by Greg Harmon
• on November 10th, 2014

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

F5 Networks, Ticker: $FFIV

F5 Networks, $FFIV, moved higher throughout the summer but then pulled back with the market in the fall. The pull back stopped at the prior support area that launched the summer move higher and below the 200 day SMA for the first time since December 2013. Then the familiar ‘V’ shaped recovery took hold. Now the stock is consolidating at the prior high and has support to break that consolidation to the upside from a bullish and rising RSI and MACD. Shorter term, the move out of a triangle consolidation off of the 20 day SMA at the end of October carries a Measured Move higher to 135 should it break the current consolidation to the upside. There is no resistance over the prior high at 128.30 and support lower may come at 124.40 and 122 followed by 118.90 and 115.40. Short interest is elevated at 6.5%.

Trade Idea 1: Buy the stock on a move over 126.75 with a stop at 124.25.

Trade Idea 2: Buy the November 14 Expiry 127 Calls (offered at $1.80 late Friday).

Trade Idea 3: Buy the November 127/130 1×2 Call Spread (5 cent credit).
This trade wins from 127 to 133 and pays the maximum at 130. This trade takes margin and you must be prepared to hedge by buying stock on a move over 133.

Trade Idea 4: Buy the November 127/130/133 Call Butterfly (65 cents).
This trade wins from 127.65 to 132.35 at Expiry and pays the maximum at 130.

Trade Idea 5: Buy the December 26 Expiry 127/November 130 Call Diagonal ($3.40).
This trade looks for the short November Calls to expire. If that happens then sell December Calls to reduce cost further, if not then buy them back to sell longer dated Calls for a net credit.

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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 next week, sees the equity markets looking healthy but maybe a bit extended on the short term basis. Elsewhere look for Gold to possibly reverse higher in its downtrend while Crude Oil may also be ready for a reversal of trend higher. The US Dollar Index may continue to consolidate in its uptrend while US Treasuries consolidate the move lower at support. The Shanghai Composite looks like it could take a breather from its run higher while Emerging Markets are continued to be biased to the downside. Volatility looks to remain subdued after the spike higher keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their individual charts show the IWM and QQQ consolidating in the short run while the SPY inches higher, but all 3 better to the upside in the intermediate trend. Use this information as you prepare for the coming week and trad’em well.

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