Top Trade Ideas for the Week of February 17, 2015: The Best

• Posted by Greg Harmon
• on February 15th, 2015

After reviewing over 1,000 charts, I have found some good setups for the week. This week’s list contains the first five below to get you started early. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which, heading into a shortened February Options Expiration week sees the equity markets looking strong, breaking long consolidations to the upside.
Elsewhere look for Gold to lower in the short term in the longer consolidation while Crude Oil consolidates, and may be ready to reverse higher. The US Dollar Index looks to continue in a consolidation range while US Treasuries are biased lower. The Shanghai Composite looks to continue to pullback in the uptrend and Emerging Markets look to hold in the bear flag, and might prove it a reversal higher.
Volatility looks to remain subdued and now drifting lower, keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts all look strong on both the daily and weekly timeframes. If you had to pick a weakness then the gaps in the QQQ chart and move out of the Bollinger Bands® may signal short term exhaustion not seen in the SPY and IWM. Use this information as you prepare for the coming week and trad’em well.

Here are the first 5 ideas for the week, to get you started:

Atwood Oceanics, Ticker: $ATW

Atwood Oceanics, $ATW, had a long fall with the crude oil, finally finding a bottom in December. After a 6 week base it is now rising. Closer in last week it filled the gap. The pullback after the gap fill held the gap and slowly started higher. A break above the yellow zone would confirm strength. The RSI is rising and bullish with the rising MACD also supporting a move higher. There is resistance at 34.85 and 36.85 followed by 38.75 and 40 before 43.05. Support may come at 32.33 and 30.33 followed by 26.75. Short interest is moderate at 6.1%. Enter long on a move over 34.85 with a stop at 33.50. As it moves over 35.90 move the stop to a $1 trailing stop and take off 1/3 on a stall at 43.05 (near the 61.8% retracement) or higher. As an options trade consider the March 35 Calls (offered at $1.30 late Friday) and trade them like the stock trade (using the stock price as a trigger, stop and target). If you are comfortable owning the stock at 30 then you can also sell the March 30 Put (50 cents) for a bullish Risk Reversal. Strikes are too wide to look at anything else.

Barnes & Noble, Ticker: $BKS

Barnes & Noble, $BKS, broke out of an ascending triangle (green) to start the year but then failed, leaving behind an upside target of 29.95. Since then it has been building a smaller ascending triangle. It is moving toward the power zone of that triangle and near the top resistance, with a break above giving a target of 27.50. The RSI is running flat in the bullish zone with a MACD also flat. There is resistance at 24.95 and then free air above. Support lower comes at 24.15 and 23.50 followed by 22.35. Short interest is high at almost 15%. Enter long on a move over 24.95 with a stop at 24.05. As it moves over 25.25 move the stop to break even and then to a 75 cent trialing stop over 25.70. Take off 1/3 on a stall at 29.95 or higher. As an options trade consider the March 25 Calls ($1.30) and trade them like the stock trade. For a precision trade consider the March 25/26 Call Spread (70 cents) and sell the March 22 Puts (40 cents). I would not be surprised if this trade can be had for a credit given the wide spread on the call side. This targets a move (or pin) at the large open interest at 26 in March.

Cullen/Frost Bankers, Ticker: $CFR

Cullen/Frost Bankers, $CFR, started pulling back in November, finally catching a bid after a double bottom at 61.65 in January. Now finding resistance at the 38.2% retracement of the move lower, it is pushing higher with a rising and bullish RSI and a rising MACD supporting more upside. There is resistance at 69.33 and 71.50 followed by 75 and 77.50 before 82. Support lower comes at 66.60 and 65.10 followed by 61.65. Short interest is high at 10.2%. Enter long on a move over 69.33 with a stop at 67.33. As it moves over 70.40 move the stop to break even and then to a $1.50 trailing stop over 71. Take off 1/3 on a stall at 82 or higher. As an options trade consider the March 70 Calls ($1.55) and trade them like the stock trade. Sell the March 65 Puts (40 cents) to offset some cost and create a bullish Risk Reversal.

Pacific Sunwear of California, Ticker: $PSUN

Pacific Sunwear of California, $PSUN, is one for the low cost people. Coming off a bottom under $1.50 in November, it has consolidated at 3, filling the gap from May. The Bollinger Bands® are tightening for a move, and the RSI is in the bullish zone while the MACD is flattening and heading towards a cross up. These support that move being to the upside. A Measured Move would target 4 conservatively measured, 4.50 more aggressively. There is resistance at 3 and 3.15 followed by 3.70 and 4 before 4.59. Support lower comes at 280 and 2.66. Short interest is high at over 11%. Enter long on a move over 3.00 with a stop at 2.88. As it moves over 3.15 move the stop to break even and then to a 20 cent trialing stop over 3.20. Take off 1/3 on a stall at 4.00 or higher. There are options for this stock, but the stock itself is priced like an option. Stick with the common.

Banco Santander, Ticker: $SAN

Banco Santander, $SAN, has a lot of gaps in the chart, but the one right above in yellow is important to confirming a bottom and reversal. After a 5 week basing, the price is up probing into the gap with a RSI rising through the mid line and a MACD moving higher. There is resistance higher at 7.24 and 7.34 followed by 7.74 and 8.19 before 8.75 and 9.05. Support lower comes at 7.04 and 6.87. Short interest is almost zero. Enter long on a move over 7.25 with a stop at 7.04. As it moves over 7.40 move the stop to break even and then to a 25 cent trailing stop over 7.50. Take off 1/3 on a stall at 8.20 or higher and by 9.05. As an options trade consider the February 27 Expiry 7 Calls (25 cents) and trade them like the stock trade. Give it more time with the March 7 Calls (40 cents) and offset some cost by selling the March 7 Puts (10 cents).

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