4 Trade Ideas for Louisiana Pacific: Bonus Idea

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

Louisiana Pacific, $LPX, started to move lower in February. It quickly broke the 50 day SMA and then accelerated lower to a bottom in March. It consolidated there in a symmetrical triangle before breaking to the upside. It had one hiccup moving higher when it retested the 50 day SMA and then continued higher to the target at 24 .75 and beyond to the 200 day SMA. It stalled when it hit prior support from late 2019 and pulled back again. But since bottoming in mid-June it has moved higher and comes into the week at the February gap.

The RSI is rising in the bullish zone and moving into overbought territory. The MACD is slowly rising and positive, also bullish. Price is following the Bollinger Bands® higher. There is resistance at 30.80 and 32 then 33.25 and 34.30. Beyond that you need to go back to 1994 to find it at 35.90 and 37.10, with the all-time high at 48 in February that year. Support lower comes at 29.60 and 28.45 then 27.70 and 26.50 before 25.50. Short interest is low at 1.9%. The stock pays a dividend with an annual yield of 1.89% and last traded ex-dividend May 14th.

The company is expected to report earnings next on August 4th after the close. The August options chain has the biggest open interest at the 28 and 30 put strikes. On the call side it is also focused at the 28 and 30 strikes, but more than 6 times bigger. The options implied move by expiration is about 15%. The September options have less open interest but what is there is focused at the 32 and 33 call strikes.

Louisiana Pacific, Ticker: $LPX

Trade Idea 1: Buy the stock on a move over 30.80 with a stop at 29.60.

Trade Idea 2: Buy the stock on a move over 30.80 and add an August 30/28 Put Spread ($2.00) while selling the September 33 Call ($1.25).

Trade Idea 3: Buy the August/September 35 Call Calendar (80 cents) and sell the August 26 Put (40 cent).

Trade Idea 4: Buy the September 27/31/33 Call Spread Risk Reversal (30 cents).

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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 ahead of the last week left in July, filled with reports from the market leaders as well as a preliminary print on the 2nd quarter GDP number and expiring COVID-19 benefits. With all this looming overhead Equities have barely given up any ground.

Elsewhere look for Gold to continue higher while Crude Oil consolidates in a narrow range. The US Dollar Index continues to move to the downside while US Treasuries advance towards their all-time highs. The Shanghai Composite looks to continue the move lower in broad consolidation while Emerging Markets consolidate in the February gap.

The Volatility Index looks to continue to drift low making the path easier for equity markets to the upside, but at a snail’s pace. Their charts also are becoming mixed after a long stretch of moving in unison. On the shorter timeframe both the QQQ and SPY are pulling back to support and from resistance, resetting momentum gauges. The IWM is holding firm though. On the longer timeframe the IWM and SPY have stalled short of their prior highs while the QQQ sees some profit taking. 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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