Top Trade Ideas for the Week of March 5, 2012: The Best

• Posted by Greg Harmon
• on March 4th, 2012

After reviewing over 900 charts, I have found some good setups for the week. This week’s list contains the first five below to get you started early. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Saturday which heading into the first full week of March sees the market still looking strong but showing signs of a needed rest in some areas. Gold, the enigma, looks lower in the very short term but positive on an intermediate and long term basis while Crude Oil is consolidating in an uptrend. US Treasuries remain in their consolidation zone but are looking slightly better to the upside while the US Dollar Index appears to have found a bottom and ready to work higher as well. The Shanghai Composite and Emerging Markets both continue to look higher into next week. Volatility looks biased to the downside but has little room lower, while it certainly does not look ready to turn higher. These influencers set the stage for the US Equity Indexes to consolidate within their uptrend. A move lower by the US Dollar Index or Treasuries should change that to continue the rally higher. The charts of Equity Indexes are mixed though. The QQQ remains very strong while the SPY is starting to look ready to consolidate and the IWM may pullback. A hard move higher by the QQQ or lower by the IWM, dragging the SPY with either could set the direction for the next few weeks. Use this information as you prepare for the coming week and trade’m well.

As always you can see details of individual charts and more on my StockTwits feed and on chartly.

Here are the first 5 ideas for the week, to get you started:

Asiainfo-Linkage, Ticker: $ASIA

Asiainfo-Linkage, $ASIA confirmed in January that it received a going private proposal from CITIC Capital China Partners II LP. The stock popped on that news but has been flagging higher since. Now in a very tight bull flag between 12.50 and 13.05, it has a Relative Strength index (RSI) that is strong and bullish and a Moving Average Convergence Divergence (MACD) indicator that is hovering near zero. The bias is to the upside. It has resistance higher at 13.80 and 15.05 before 16.20 and 17.60. The Measured Move out of the flag is to 14.70. There is also 10% short interest in the name. Support lower is found at 11.50 and 11 before the gap down to 9.92. Enter long on a move over 13.15 with a 25 cent trailing stop. On a touch at 14.70 take off 1/3 and take another 1/3 at 16.20. As an options trade buy the April 14 Calls (offered at 40 cents late Friday) and trade them like the stock trade. To reduce the cost consider also selling the April 9 Puts (15 cents) creating a bullish Risk Reversal.

Danaher, Ticker: $DHR

Danaher, $DHR, is consolidating at a Double Top at 53.65, which is also the target from the breakout of the symmetrical triangle from the beginning of the year. A break above 53.65 triggers a measured Move to 56.50 and then 58 with resistance at 56 along the way. Support below 52.70 comes at 51.20 and 50.70 followed by 49.75. It has an upward bias from the price action and is supported by the bullish RSI and improving MACD. Enter long on a move over 53.65 with a $1 trailing stop. Take off 1/3 at 56.50 and tighten the stop to 60 cents and take off another 1/3 at 58. As an options trade consider buying the March 55 Calls (20 cents) and trading them like the stock. You could also sell the April 45 Puts (15 cents) to bring your cost near zero. Roll the March Calls up to the April 55 next week if it s a slow mover or the April 57.5 if faster and still has not reached the target.

Hain Celestial, Ticker: $HAIN

Hain Celestial, $HAIN, made a Double Top last week but remains biased to the upside with a RSI that is bullish and a MACD that is near zero and could cross positive. A break over that top at 42.25 has a Measured move to 47.40. It is also being attracted to the Median Line of the Pitchfork higher with Bollinger bands that are opening higher. Support lower is at 39.60 and 37.80. Enter long on a move over 42.50 with a 80 cent trailing stop and take off 1/2 at 47.40, tightening the stop to 40 cents. As an options trade buy the April 45 Calls (30 cents) and trade them like the stock above. Also consider selling the April 40 Puts on that break if you can get back at least 1/2 of the cost of the calls.

Jefferies, Ticker: $JEF

Jefferies, $JEF, is moving higher out of its consolidation zone between 15.20 and 16.50. Other investment Banks are moving too but this one has over 5% short interest to help it higher. Consolidating Friday, a move higher has resistance at 18.25 and then 19.61. The bullish RSI and positive and increasing MACD support more upside. Enter long now with a 50 cent trailing stop and take off 1/3 at 18.25 and another 1/3 at 19.61, tightening the stop to 30 cents. As an options trade consider buying the April 18 Call (65 cents) and trading it the same way as the stock. You can also sell the April 16 Put (55 cents) to create a bullish Risk Reversal and lower the options premium to near zero.

Questcor Pharmaceuticals, Ticker: $QCOR

Questcor Pharmaceuticals, $QCOR, is in a bull flag after moving off of the base at 34. A move over 39.70 has a Measured Move to 46 with resistance at 42.20 along the way. Over 46 it has a Measured Move to 55. The RSI is trying to turn bullish sitting just under 60 and the MACD is positive but trailing a little as is seen in many flags. Short interest is very high at over 35% and will likely help it higher as it moves up. Support can be found at 38 and 35.18 before the 34 base. Enter long on a move over 39.70 with a 80 cent trailing stop. Take off 1/3 at 46 and another 1/3 at 50. As an options trade consider buying the April 40 Calls (2.60) and selling the April 46 Calls (60 cents) to create a Call Spread and use the stock triggers to trade it. You can also sell the April 35 Puts (1.25) to create a Call Spread Risk Reversal for near 75 cents and with upside of $6, a reward to risk ratio of 8:1.

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