Top Trade Ideas for the Week of January 30, 2012: The Rest Premium

• Posted by Greg Harmon
• on January 29th, 2012

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

Endo Pharmaceuticals, Ticker: $ENDP

Endo Pharmaceuticals, $ENDP, is at resistance at 37.90, the bottom of the previous descending triangle from April through July, after stair stepping higher. As it sits there the Relative Strength Index (RSI) is bullish and hovering at 79, while the Moving Average Convergence Divergence (MACD) indicator is positive and beginning to grow again. The Simple Moving Averages (SMA) are starting to rise with the 50 day SMA heading towards a Golden Cross over the 200 day SMA. A move over resistance continues the stair step higher towards the 42 area and nearly 5% short interest should give it a tailwind. There is resistance higher at 39 and 40.25 on the way to 42 and then 43 above it. Support is found lower at 37 and 36.40 followed by 35.40. Enter long on a move over 37.90 with a 25 trailing stop. Take off 1/3 at 42 and another 1/3 at the previous high at 44.50. As an options trade buy the February 40 Calls on the same trigger, stop and profits targets as the stock. These were offered at 70 cents late Friday. To reduce the cost consider also selling the February 35 Puts to create a bullish 35/40 Risk Reversal, lowering the cost by 45 cents based on Friday’s activity.

Endeavour Silver, Ticker: $EXK

Endeavour Silver, $EXK, is rising in a symmetrical triangle, above the confluence of the SMA’s. It has support for a continued move higher from the rising and bullish RSI and the positive and growing MACD. A move over the upper rail at 11.40 triggers a target on the pattern break higher to 16.40. Rejection at the rail puts it back towards those SMA’s. Resistance higher comes at 12.10 followed by 12.60 and 13.10. Support lower is at 10.38 before 10 and the bottom rail at 9.40. Enter long on a mover over 11.40 with a 20 cent trailing stop. Take off 1/3 at 13.10 and another 1/3 at the pattern target at 16.40. As an options trade buy the March 12.5 Calls on the same trigger, stop and target points as the stock trade. These were offered at 40 cents Friday. You can lower the cost by also selling the March 10 Puts, which were bid at 30 cents Friday, to create a bullish 10/12.5 Risk Reversal.

Pep Boys, Ticker: $PBY

Pep Boys, Manny, Moe & Jack, $PBY, is peeking above resistance at the 11.96 Fibonacci level which halted it from November to December. There is a gap to fill up to 13.28 or 11% higher. The rising and bullish RSI at 69 and the positive and increasing MACD support a continued move higher. It also has over 10% short interest that could get it going higher quickly as it confirms higher. Resistance is at 12.86, the 61.8% Fibonacci level, followed by the gap fill and then at 14.11and 14.55. Enter long now with a 30 cent trailing stop. Take off 1/3 as it fills the gap and then another 1/3 at 14.10. Options are very illiquid on this name.

PPG Industries, Ticker: $PPG

PPG Industries, $PPG, broke above the descending trend line resistance at 88 nine trading days ago. This is also the neckline of an Inverted Head and Shoulders with a target of at least 112.60. It is consolidating in a bull flag at resistance at 90 with a RSI that is bullish but flat and a MACD that is fading but likely to glance off again higher instead of crossing, given the angle of approach. Wait for the move over 90 to enter. Resistance is found higher at 92.25 followed by 93.90 and 95.90. Support lower is found at 88 and 84.60 followed by 82.40 and 79.25. Enter long on a move over 90 with a $2 trailing stop. Take off 1/3 at 95.90 and another 1/3 on a touch at 100. As an options trade consider buying the February 90 Calls using the same trigger, stop and profit targets as the stock trade. These were offered at 1.30 late Friday. You can reduce the cost of the Calls by also selling either the February 85 Puts or the March 80 Puts, to create a bullish Risk Reversal. Both were bid around 60-65 cents late Friday.

Regions Financial, Ticker: $RF

Regions Financial, $RF, is consolidating near 5.40 after a move higher from the 4.40-4.50 breakout area. Looking at the volume at price bars it is in a vacuum area that exists up to about 6.00. The RSI is bullish and rising, continuing the trend higher. At over 71 on the 14 day measure, it is technically overbought but not extreme. The MACD is positive and slowly growing, also supporting more upside. There is resistance higher at 5.82 followed 6 and then 6.25. Over 6.25 there is another volume vacuum up to 6.75. Support is found lower at 4.75 and 4.50 followed by 4.22. Enter long on a move over 5.35 with a 15 cent trailing stop and take off 1/3 at 6 and another 1/3 at 6.25. As an options trade buy the February 5.5 Calls or the March 5.5 Calls now or on the same trigger, stop and profit targets as the stock trade. These were offered at 12 cents and 24 cents late Friday.

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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 as January is closing out, the coming week looks to bring more upside for Gold and further consolidation within the broad 93 – 103.83 range for Crude Oil. The US Dollar Index looks to continue lower while US Treasuries consolidate after probing lower. The Shanghai Composite and Emerging Markets are biased to the upside after China taking the week off. Volatility looks to continue to slowly move lower toward support. These influencers create a positive environment for the US equity index ETF’s SPY, IWM and QQQ, and their charts are all pointing to higher levels. A strong move by China lower could change this picture or as sharp move higher by the US Dollar Index. Use this information as you prepare for the coming week and trade’m 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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