Top Trade Ideas for the Week of October 8, 2012: Bonus Idea

• Posted by Greg Harmon
• on October 8th, 2012

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

Chevron, Ticker: $CVX

Chevron, $CVX, is consolidating in a bull flag between 116 and 118.50. It has a bullish Relative Strength Index (RSI) and a Moving Average Convergence Divergence indicator (MACD) that is negative but improving. Both support a move higher. A break over the top of the flag carries a Measured Move to 124. Use a move over 118.50 as a long entry.

Trade Idea 1: Buy the stock on the trigger with a $2 trailing stop. Take off 1/3 at the target 124.

Trade Idea 2: Buy the October monthly 120 Calls (offered at 43 cents late Friday) as a pure speculative play.

Trade Idea 3: Sell the October monthly 110 Puts (11 cents) to offset the cost of trade 2 or as a possible long entry lower.

Trade Idea 4: Buy the November 120/125 Call Spread ($1.08) nearly a 5:1 reward to risk ratio.

Trade Idea 5: Sell the November 110 Puts (69 cents) for the premium or to offset the cost of trade 4.

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After reviewing over 1,000 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 next week suggest keeping an eye on volatility as a signal for a turn, with the expectation that it will remain subdued. Gold looks to be set up to move lower short term but remain bullish longer term while Crude Oil looks lower, and may be seeking a bottom nearby. US Treasuries are set up to continue lower while the Dollar Index may continue to consolidate but is also biased lower. The Shanghai Composite starts trading again with a bias to continue the bounce within the downtrend from before the holiday while Emerging Markets consolidate at resistance. These all set up for the US Equity Index ETF’s, SPY, IWM and QQQ to continue higher. The charts of the Indexes themselves agree with the bias but show signs of consolidation or a short pullback. Use this information as you prepare for the coming week and trade’m well.

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Dragonfly Capital Views Performance Through September 2012 Expiry

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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