Top Trade Ideas for the Week of January 30, 2017: The Rest Premium

• Posted by Greg Harmon
• on January 29th, 2017

Here are the Rest of the Top 10 with Premium Content in Bold:

Alcoa, Ticker: $AA

Alcoa, $AA, rose from a low near 21 after the company split and found resistance in Mid-November. It consolidated under that resistance for 2 months until pushing higher in January. Last week it pulled back and printed a doji Thursday. It reversed Friday to the upside and has support for more from a bullish RSI and MACD. Look for continuation to participate. The reversal Friday confirmed a Morning Star pattern and gives a low to trade against. There is resistance at 38.50 and then free air and a target on a Measured Move to 42. Support lower comes at 36 and 32.60. Short interest is moderate at 3.8%. Enter long now (over 36) with a stop at 36. As it moves over 38.50 move the stop to a $2.50 trailing stop and let the stop take you out. As an options trade consider the February 38 calls (offered at 75 cents late Friday) and trade them like the stock trade (using the stock price as a trigger, stop and target). Sell the February 40 Calls (20 cents) with high open interest and the February 34 Puts (30 cents) to add leverage.

Boston Scientific, Ticker: $BSX

Boston Scientific, $BSX, rounded out a top over the summer, pulling back to a low at the beginning of December. Following the drop, it printed a hammer and was confirmed higher to start December. It has trended up ever since. Friday it broke a small bull flag and started higher. The RSI is bullish and rising while the MACD is level after a cross down. Look for a follow through Monday to participate to the upside. The Measured Move out of the flag targets 25.25. The price action since the longer pullback has built a Cup and Handle pattern and gives a target above that to 27.25. There is resistance at 24 and then 24.50 before free air. Support lower comes at 23.40 and 23.10. Short interest is low at 1.5%. The company reports February 2nd before the market opens. Enter long now (over 23.40) with a stop at 23. As it moves over 24 move the stop to a 50 cent trailing stop and then to a 65 cent trailing stop over 24.15. Take off 1/3 on a stall at 27.25 or higher. As an options trade consider the February 24 Calls (58 cents) and trade them like the stock trade.

Cerner, Ticker: $CERN

Cerner, $CERN, started moving lower in August, finding a bottom in November. It consolidated there for 2 months until pushing higher earlier this month. It came back to retest the break out before moving back higher last week. The RSI is rising in the bullish zone and the MACD moving higher, both supporting more upside. Look for continuation to participate higher. The Measured Move gives a target near the 200 day SMA and just below a 50% retracement of the move lower. There is resistance at 54.20 and a gap to fill to 57.25 then 58.45 and 60.40. Support lower comes at 50.75 and 49.25 followed by 47. Enter long on a move over 53 with a stop at 50.75. As it moves over 54 move the stop to break even, and then to a $1.50 trailing stop over 54.50. Take off 1/3 on a stall at 57.25 or higher. As an options trade consider the February 52.50 Calls ($2.05) and trade them like the stock trade. The company reports February 9th.

FedEx, Ticker: $FDX

FedEx, $FDX, started higher in a couple of steps out of consolidation in September. It found a top in December and pulled back, making a higher low at the start of last week. Now moving higher it enters the week at the support level before the pullback, with a RSI rising and bullish and a MACD crossed up and moving higher. Look for continuation to participate to the upside. The short term action sees a move out of the Bollinger Bands®, so a day or two sideways could start off the week. The longer term though sees a target from an AB= CD pattern to 216. There is resistance at 197 and 200.50 then free air. Support lower comes at 191 and 185.50. Short interest is low at 1.3%. Enter long now (over 191) with a stop at 191. As it moves over 199 move the stop to break even, and then to a $5 trailing stop over 201. Take off 1/3 on a stall at 216 or higher. As an options trade consider the February 195 Calls ($3.85) and trade them like the stock trade. Sell the February 185 Puts (54 cents) to lower the cost.

Yum Brands, Ticker: $YUM

Yum Brands, $YUM, had a strong run higher from a February low. It stalled in September though and had a mild pullback before bouncing just above its 200 day SMA, and returning to resistance. Friday it pushed above and it has support for more from a rising and bullish RSI and MACD. Look for continuation to participate. A broader view shows a Shark harmonic completed with that September high and it then retraced 38.2% of the pattern before bouncing. There is resistance at 66.20 and 67 before 69. Support lower comes at 65 and 64. Short interest is low at 2.1%. Enter long on a move over 66.20 with a stop at 65. As it moves over 67 move the stop to break even and then to a $2.50 trailing stop over 68.50. Let the stop take you out. The company is expected to report earnings February 8th. As an options trade consider the February 10 Expiry 66 Calls ($1.30) and trade them like the stock trade.

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The Best

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 February saw the Equity markets continuing to look strong, especially on the intermediate charts.

Elsewhere look for Gold to continue lower while Crude Oil churns over support. The US Dollar Index continues lower but may be bottoming while US Treasuries are biased lower. The Shanghai Composite is resuming its drift higher, but will be closed until Friday while Emerging Markets work higher.

Volatility looks to remain at abnormally low levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts show real strength continuing in the intermediate term. Shorter term the QQQ has been the leader but is getting a bit overheated, while the SPY and IWM may be ready to start higher out of consolidation. 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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