Top Trade Ideas for the Week of January 9, 2012: Bonus Idea

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

Mastercard, Ticker: $MA

Mastercard, $MA, is breaking down and ended the week below the 100 day Simple Moving Average (SMA). This has been a key support level going back to December 2010 when it crossed the 200 day SMA moving higher. As it moves through this time the Relative Strength Index (RSI) is making a new low, below the levels where the stock has bounced in the past. The Moving Average Convergence Divergence (MACD) indicator is growing more negative quickly and supporting more downside. The volume on this move lower has also been very strong. This looks to have more downside in it and the Bollinger bands are expanding to allow for it. Support lower comes at 340 and 327.50 followed by 320 and 312. Under that there is support at 305 and then 300. Resistance on a move back higher comes at 350 and 358. Finally the Measured Move from the last leg lower takes it to a target of 324. The trigger lower is a continuation Monday.

Trade Idea 1: Sell short now (342.92) with a $10 trailing stop.
Book some profits as it moves through the 320’s.

Short Term Plays

Trade Idea 2: Buy the Weekly January 13 Expiry 335 Strike Puts
These were offered at 3.00 late Friday.

Trade Idea 3: Sell the Weekly January 13 Strike 360 Strike Calls
These were bid at 80 cents late Friday.

Trade Idea 4: Combine Ideas 2&3 creating a bearish Risk Reversal
This was offered at 2.20 late Friday.

Intermediate Term Plays

Trade Idea 5: Buy the January 335/320 Put Spread
This was offered at $3.20 late Friday offering a reward to risk ratio of 4.7:1.

Trade Idea 6: Sell the January 365 Calls
These were bid at 1.17 late Friday

Trade Idea 7: Buy the January 335/320 Put Spread Risk Reversal selling the 365 Calls.
Combining Ideas 5 and 6 for a net debit of just over $2 and a possible payoff of $15.

Trade Idea 8: Buy the January 335/320/305 Put Butterfly
A bet that it finishes between 305 and 335 with a maximum payout at 320 on January Expiry. Buy a January 335 and 305 Strike Put and sell 2 320 Strike Puts to make the butterfly. This was offered at 2.40 later Friday.

I could go on for a while here but this is probably enough to get you thinking.

The Best

The Rest Premium

The Rest

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

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 looks with one week in the books that the tone of the Equity markets is becoming positive. Several areas are still likely to consolidate further before moving. Gold is one of them and it looks likely to move lower when done consolidating, while Crude Oil is biased higher. US Treasuries look to break consolidation higher while the US Dollar Index just keeps rocketing higher. The Shanghai Composite and Emerging Markets look to break their ranges to the downside, while Volatility continues lower. These factors combine to create an environment where there is a slight upward bias to equities, given the recent correlation with the US Dollar Index, and the charts of the Equity Index ETF’s SPY and QQQ reflect that bias. The IWM is more neutral. 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.

blog comments powered by Disqus
Dragonfly Caps Blog