Top Trade Ideas for the Week of January 23, 2012: Bonus Idea

• Posted by Greg Harmon
• on January 23rd, 2012

Here is your Bonus Idea with 5 ways to play it and links to the full Top Ten:

United States Steel, Ticker: $X

United States Steel, $X, is bumping up against resistance at 29, the top of an ascending triangle. If it can break through higher then it has resistance at 31.20-32.20 and 40.69 above that. The target from the triangle break out is to 39. As it sits here the Relative Strength Index (RSI) is hovering around the mid line and has not ventured into bullish territory while the Moving Average Convergence Divergence (MACD) indicator is flat lined offering no guidance. A rejection sees support lower at the 25.30-26.50 range and the volume by price bars show this should be good support. They also show that there is a near vacuum of price history over 31 until 42.

Trade Idea 1: Buy the stock on a move over 29.
A straight breakout play

Trade Idea 2: Buy the January 27 Expiry 30 Strike Calls on a move over 29.
A straight breakout play but at a cost of only about 12 cents

Trade Idea 3: Buy the February 30 Strike Calls on a move over 29.
A straight breakout play but at a cost of only about 78 cents

Trade Idea 4: Sell the February 25 Strike Puts for 60 cents now
A bet that the price will not fall below the triangle and price support by February Expiry.

Trade Idea 5: Buy the February 30/25 bull Risk Reversal on a move over 29.
A bullish bet leveraging the price support below to reduce the cost to less than 20 cents.

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After reviewing over 900 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 Saturday which heading into the last full week of January has Gold looking to consolidate or move higher within the intermediate downtrend, limited by 1700, while Crude Oil continues to consolidate within the 92.50 to 102.5 channel. Both the US Dollar Index and Treasuries are on watch for a breakdown lower. The Dollar out of a rising channel and Treasuries an ascending triangle. The Shanghai Composite looks to continue higher within the downtrend while Emerging Markets move up within the broad channel with 42.54 at the top. Volatility looks to consolidate or bounce within the downtrend after a strong move lower. These influencers combine to support more upside for the Equity Index ETF’s, and the charts for the SPY, IWM and QQQ agree and look higher. Use this information as you prepare for the coming week and trade’m well.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

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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