Top Trade Ideas for the Week of October 12, 2015: The Best

• Posted by Greg Harmon
• on October 11th, 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 October Options Expiration week sees the equity markets looking stronger, but they have not sent the all clear signal yet.

Elsewhere look for Gold to continue its short term uptrend while Crude Oil does the same but might encounter resistance. The US Dollar Index has a short term bias lower for the week in the broad consolidation while US Treasuries are biased lower short term as well. The Shanghai Composite looks to continue in consolidation while Emerging Markets are biased to the upside.

Volatility looks to return to more normal levels relieving the downward bias on the equity index ETF’s SPY, IWM and QQQ. Their charts all show strength continuing into next week but with the SPY the strongest followed by the QQQ and then the IWM on the longer term look. Use this information as you prepare for the coming week and trad’em well.

Aegerion Pharmaceuticals, Ticker: $AEGR

Aegerion Pharmaceuticals, $AEGR, is a classic bottom and reversal. It may be just a Dead Cat Bounce, but that does not matter. The bounce looks to be worth something. After falling more than 85% since the top in October 2013, it has retraced the entire move up off of a base in 2012. The stock made a higher high Friday with support for more from the rising RSI and MACD that crossed up. There is resistance possible at 15.25 and 17 followed by 18.25 and 19. Support lower comes at 14.30 and 12.80. Short interest is high at 59%. Enter long now (over 14.30) with a stop at 13.90. As it moves over 14.90 move the stop to break even and then to a 45 cent trailing stop over 15.10. Take off a 1/3 on a stall at 17 or higher. Consider the October 15 Calls (offered at 40 cents late Friday) as a short term defined risk trade, and trade them like the stock trade (Using the stock price as a trigger, stop and target). Give it more time with the November 15 Calls ($1.35).

Cadence Design Systems, Ticker: $CDNS

Cadence Design Systems, $CDNS, showed up on the bull scan I am testing in July and made the Top 10 in early August. The market pulled back. Since then the stock has built a bearish Deep Crab harmonic pattern. The opportunity comes from the Potential Reversal Zone (PRZ) of the Deep Crab being all the way up at 24.16. It currently sits at the prior high after breaking consolidation Friday to the upside. The RSI is bullish and rising while the MACD has crossed up and is rising too. There no resistance above 21.75 and support lower comes at 21.33 and 20.80 followed by 20. Short interest is high at 15.5%. Enter long on a move over 21.75 with a stop at 21.15. As it moves over 22 move the stop to break even and then to a 65 cent trailing stop at 22.40. Take off 1/3 on a stall at 24.16 or higher. As an options alternative consider the November 21 calls ($1.35) and trade them like the stock trade.

GameStop, Ticker: $GME

GameStop, $GME, has moved in its own Shark harmonic pattern since snapping higher after the August pullback. The PRZ is at 47.83 above, which would make a marginal new high. The RSI is bullish and rising while the MACD rises too. There is resistance at 44.65 and 46.30 before 47.70. Support lower comes at 42.70 and 41.65. Short interest is over 45% so a short squeeze could also push it up. Enter long on a move over 44.65 with a stop at 43.65. As it moves over 45.10 move the stop to break even and then to a 75 cent trailing stop over 45.40. Take off 1/3 on a stall at 47.70 or higher. As an options trade consider the October 44.5 Calls (71 cents) and trade them like the stock trade. For a short term levered trade consider a October 44/44.5/45 Seagull (10 cent credit, 44.5/45 Call Spread selling 44 Put). Give it more time with the November 6 Expiry 44.5 Call ($1.46) and sell the October 23 Expiry 45.5 Call (44 cents) to lower the cost with a strategy to roll out and up through time.

Heartland Express, Ticker: $HTLD

Heartland Express, $HTLD, has lost over 30% of its value since peaking at the end of last year. It found a bottom in July and started higher but failed through August. But since May it has created a rounded bottom, now making a series of higher lows. Friday made a higher high as well. The RSI is into the bullish zone and rising while the MACD is crossed up and rising. There is resistance higher at 22 and 22.50 followed by 23.35 and 24 before 25. Support lower comes at 20.70 and 19.90. Short interest is elevated at 8.6%. Enter long now (over 21.25) with a stop at 20.65. As it moves over 21.80 move the stop to break even and then to a 60 cent trailing stop over 22. Take off 1/3 on a stall at 25 or higher. Options are too illiquid to use for this trade.

Westmoreland Coal, Ticker: $WLB

Westmoreland Coal, $WLB, had been trending lower until it capitulated from June through August, accelerating lower. Since bottoming in early August it has built a tightening range, in an ascending triangle. Friday took it to the top of that triangle. The RSI is rising and bullish with the MACD crossed up and rising. There is resistance at 16 and 18 followed by 22.70 and 25. Support lower comes at 14.75 and 14.10 followed by 13.25. Short interest is high at 24.4%. Enter long on a move over 16 with a stop at 15. As it moves over 16.60 move the stop to break even and then to a 80 cent trailing stop over 17, widening to a $1.10 trailing stop over 20. Take off 1/3 on a stall at 20.88 or higher, the target of the triangle break, or higher, and by 22.70, which would likely intersect with the 200 day SMA at that time. At the money options spreads are too wide to trade in this name.

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