Top Trade Ideas for the Week December 1, 2014: Bonus Idea

• Posted by Greg Harmon
• on December 1st, 2014

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

Keycorp, Ticker: $KEY

The first impression of Keycorp, $KEY, is that it has triggered an Inverse Head and Shoulders pattern. This carries a price objective to at least 15.50. And with the RSI in the bullish zone after breaking 60 last week, and the MACD crossed up that is a distinct possibility.

But the Bollinger bands are flat as the price hits the top, and the last 3 days have created an expanding wedge, often a reversal pattern. From that perspective the RSI falling and the stall in the MACD support a reversal.

There is support at 13.50 and 13.10 before 13 and 12.75 followed by 12.50 and 11.67. There is resistance higher at 13.65 and 14.20 before 14.50 and then free air higher.

Trade Idea 1: Buy the stock on a break over 13.70.
A straight bullish bet, use a stop loss.

Trade Idea 2: Buy the December 13/14 Bullish Risk Reversal (offered free late Friday).
A bullish bet with downside exposure. You may be put the stock at 13 if the price closes under 13 at Expiry. This trade uses margin.

Trade Idea 3: Buy the January 14 Call (20 cents).
A straight bullish bet but only risking 1.5% of the capital of Trade Idea 1, 20 cents.

Trade Idea 4: Buy the January 14 Call and sell the December/January 13 Put Calendar (10 cents).
An upside play that gains some leverage from selling the put calendar, and protection on the downside for 3 weeks. You may be put the stock it fit closes under 13 on January expiry.

Trade Idea 5: Buy the December/January 14 Call Calendar and sell the December/January 13 Put Calendar (4 cents).
A leveraged upside bet that like Trade Idea 4 has downside protection short term and risk longer term, but also looks for resistance to halt a move higher in the short run.

Trade Idea 6: Buy the January 13/14 Strangle and sell the same Strangle in December (27 cents).
This is a non-directional trade, that can win on a move in either direction, expecting the December options to expire worthless.

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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 Friday which, as the calendar turns to December sees the Equity markets showing signs of divergence or rotation but with continued strength. Elsewhere look for Gold to continue lower, resuming its downtrend while Crude Oil also continues lower. The US Dollar Index and US Treasuries look strong though and are biased to continue to the upside. The Shanghai Composite is also strong and looks to continue higher while Emerging Markets are consolidating in what may be a bearish pattern. Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts show continued strength in the QQQ, with the SPY a bit stretched short term but looking good on the intermediate timeframe, while the IWM continues to consolidate in the longer consolidation range. Use this information as you prepare for the coming week and trad’em 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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