Top Trade Ideas for the Week February 22, 2016: Bonus Idea

• Posted by Greg Harmon
• on February 22nd, 2016

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

Oracle, $ORCL, stock has had some twists and turns, not unlike the stunt plane above that they sponsor. Most of the action has been to the down side since making a top near 45 in June 2015. There was a failed rally in the 4th quarter that brought it down to about $34 in January where it seems to have bottomed for now.

The move higher to end January closed the gap that started the year and then consolidated. Now a second move higher is underway and would target about 37.75. This would be a 61.8% retracement of the full move lower, a key technical level. From there it would not surprise to see some further consolidation, before the third leg of a 3 Drives Pattern higher to near the full retracement.

Momentum indicators are supportive of more upside, with the RSI on the edge of the bullish zone as it rises, and the MACD rising. The Bollinger Bands® are also turning higher. There is resistance above at 37.15 and then 38.05 followed by 39.50 and 40.64. Support lower may come at 36.45 and 36 followed by 34.55 and 33.70. Short interest is low at 1.3% and the company is expected to report earnings next March 16th.

Looking at the options action the February 26 Expiry options show large open interest at the 35.5 Put Strike and open interest spread on the call side from 35 to 37.5 totaling less than that large put piece. The March 11 Expiry, right before earnings, has call interest from 36 to 37.5 and puts at 35.5. Moving out to the March options, after the earnings report, shows large open interest at 30 and then from 33 to 35 on the put side. On the call side open interest is all above from 36 to 40. Certainly not a bias higher in the options.

Oracle, Ticker: $ORCL

Trade Idea 1: Buy the stock now (over 36.40) with a stop at 36.

Trade Idea 2: Buy the stock now (over 36.40) with a March 33/36/April 39 Collar (11 cents).

Trade Idea 3: Buy the March 4 Expiry 36.5 Calls (79 cents).

Trade Idea 4: Buy the March 4 Expiry 36.5/37.5 Call Spread (52 cents).

Trade Idea 5: Buy the March 4 Expiry 36.5/37.5 Call Spread Risk Reversal selling the March 4 Expiry 36 Puts (20 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 which sees moving past February Options Expiration that the equity markets showed some strength in the week but also a need for more upside before starting to talk about a reversal.

Elsewhere look for Gold to consolidate in its recent uptrend while Crude Oil turns lower in the consolidation zone in its downtrend. The US Dollar Index looks better to the downside in its broad consolidation while US Treasuries are biased lower short term in the uptrend. The Shanghai Composite looks to continue the slow move higher in the downtrend and Emerging Markets look to consolidate their move up in their downtrend.

Volatility looks to remain elevated but biased to the downside starting to ease the bias lower for the equity index ETF’s SPY, IWM and QQQ. Their charts all show short term digestion of the large moves higher and possible exhaustion short term, which could resume the downward path. 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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