Top Trade Ideas for the Week of May 9, 2011: Bonus Idea

• Posted by Greg Harmon
• on May 8th, 2011

Here is your Bonus Idea with links to the full Top 10:

Express Scripts, Ticker:$ESRX

Express Scripts was on the list last week and returns with a twist. It has been testing the neckline of an Inverse Head and Shoulders pattern for a week. If it can get through then the target is at least 64.35, with resistance along the way only at 58.77. But the candles testing the neckline have all been long legged doji, a sign of a potential reversal. It So for the Bonus Idea tonight I have an options trade. To play both potential moves consider the May 57.50/60 Strangle. This is buying both the May 57.50 Strike put and the May 60 Strike call. The price based on the last trades Friday would be $1.23 so it pays off if the stock moves below 56.27 or above 61.23 by May 20th. To recoup some of the cost, sell the May 57.5 put on a confirmed break and hold above the neckline, or the May 60 call on a confirmed rejection below the neckline.

The First 5

The Rest

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

After reviewing over 700 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 for further downside if Gold gets below 1475 and upside over 1500. Also look for Crude Oil to continue lower with support at 97 but a move above 100 turning it bullish. The Dollar Index looks to continue higher next week along with US Treasuries. The Shanghai Composite looks to continue lower in the coming week along with Emerging Markets. Expect the Volatility Index to remain in a range between 15.50 and 22. The SPY and IWM look for more downside longer term with the QQQ more bullish. All of the Equity Index ETF’s will trigger buys on moves to new highs though after printing a series of higher highs an higher lows. Use this information to understand the major trend and how it may be influenced as you prepare for the coming week ahead. 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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