Top Trade Ideas for the Week April 4, 2016: Bonus Idea

• Posted by Greg Harmon
• on April 4th, 2016

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

FedEx, $FDX, fell out of a rising wedge pattern at the start of December, finally landing more than 25% lower in mid January. From that bottom the price rose to consolidation under the 100 day SMA. That built a Cup and Handle pattern and gave an upside target of 170. The stock then gapped higher and has since consolidated at the prior high, under that 170 target. In moving higher it also established a Measured Move to 184 should it break the consolidation and take off to the upside.

Momentum indicators are running hot in this stock. The RSI is in the mid 70’s, technically overbought but not extreme. The MACD is rolling over and crossing down setting up a divergence. Short interest is low under 2%, so not much to fuel a flight higher. But there has been and continues to be strong accumulation in the stock. So is it set up to take off or crash land?

The options chains show open interest spread in the April monthly chain, but mostly below the current price. In the May monthly options the Put side is spread from 145 to 160 while the Call side focused from 165 to 175, but all much smaller than the April open interest. Heading to the July contract, the first that goes beyond the June earnings report, the open interest is almost entirely below the current price. The biggest open interest is on the Call side at the 145 and 150 strikes.

FedEx, Ticker: $FDX

Trade Idea 1: Buy the stock on a move over 164.50 with a stop at 160.

Trade Idea 2: Buy the stock on a move over 164.50 with a May 160/145 Put Spread ($2.50) and selling a July 180 Covered Call ($1.30) for cheap protection.

Trade Idea 3: Buy the May 160/150/140 Put Butterfly ($1.50) looking for the gap to fill.

Trade Idea 4: Sell the stock short ($163.67) and buy a May 165 Call ($3.85) to protect against a move higher.

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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 the first full week of April sees the equity indexes looking strong and ready to make another leg higher.

Elsewhere look for Gold to continue its pullback along with Crude Oil. The US Dollar also looks to continue lower, possibly testing key 12 month support while US Treasuries are breaking to the upside and look to continue. The Shanghai Composite looks poised to move higher in its downtrend as Emerging Markets continue to trend higher.

Volatility looks to remain low and biased lower keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ, despite the moves the past week. Their charts also look strong on both the daily and weekly timeframe with the only slight warnings coming from slowing momentum indications. 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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