Top Trade Ideas for the Week of February 17, 2015: The Rest Premium

• Posted by Greg Harmon
• on February 16th, 2015

Here are the Rest of the Top 10 with Premium Content in Bold:

Abbott Laboratories, Ticker: $ABT

Abbott Laboratories, $ABT, moved higher off of the October dip to a broad consolidation range. Currently it is testing the top of the range, and falling trend resistance. The RSI is moving higher and on the edge of a move into the bullish zone over 60 with a MACD moving higher, supporting more upside price action. The target on a break over resistance is a move to 49.60. There is resistance at 46.35 and then free air above. Support lower comes at 45.30 and 44.50 followed by 43.30. Short interest is low under 1%. Enter long on a move over 46.20 with a stop at 45.50. As it moves over 46.50 move your stop to break even ad then to a 70 cent trailing stop over 47. Take off 1/3 on a stall at 50 or higher. As an options trade consider the March 46 Calls (offered at $1.05 later Friday) and trade them like the stock trade (using the stock price as a trigger, stop and target). Offset some cost by selling the March 43 Puts (20 cents) and/or March 49 Calls (11 cents).

BioMarin Pharmaceutical, Ticker: $BMRN

BioMarin Pharmaceutical, $BMRN, has been trending higher since moving up off of a “W-V” pattern. Since January it has consolidated under resistance at the round number. Last week saw a move up off of the 50 day SMA to that resistance again. As it rises the RSI is also rising and in the bullish zone with a MACD about to give a buy signal on a cross up. The Bollinger Bands are opening higher to allow another run. There is no resistance higher and support comes at 96 and 93 followed by 91. Short interest is low under 3%. Enter long on a move over 101 with a stop at 98. As it moves over 103 move the stop to break even and then to a $3 trailing stop over 104. Let the stop take you out if you cannot watch it for a stall. This move should go at least to 105 but longer term could last. As an options trade consider the March 100 Calls ($5.90) and trade them like the stock trade. Offset some cost by selling the February 105 Calls (40 cents) and then the March 105 or 110 Calls ($3.10 or $1.75) after they expire depending on how far it goes (if at all) this week. You can also consider selling the March 85 Put (75 cents) a level under the 100 day SMA. A timing play could use the March 100/105/110 Call Butterfly ($2.30) and also selling that 85 Put for leverage.

Cheniere, Ticker: $LNG

Cheniere, $LNG, had a long run higher before pulling back on a touch at 85. Since October that pullback has started to consolidate in a tightening symmetrical triangle. Friday left it near the top with a RSI tapping on the bullish zone over 60 while the MACD is crossed up and rising. The break of the triangle higher carries a target to 95.70. The Bollinger Band squeeze suggests a move is going to happen soon. There is resistance higher at 76 and 76.80 followed by 79.10 and 82.25 before 85. Support lower comes at 73.20 and 70.85 followed by 66 and 60.60. Short interest is elevated at just over 7%. Enter long on a move over 76 with a stop at 73.20. As it moves over 77.50 move the stop to break even and then to a $2.20 trailing stop over 78.20. Take off 1/3 on a stall at 95.70 or higher. As an options trade consider the March 75 Calls ($3.30) and trade them like the stock trade. Sell the February 27 Expiry 77.5 Calls (79 cents) to offset some cost and should they expire continue to look to sell shorter dated upside calls until the March Expiry. There is heave open interest at the March 65 Put (82 cents) so you could consider selling that as well if you are comfortable owning the stick there.

Rockwell Automation, Ticker: $ROK

Rockwell Automation, $ROK, still has not the gap from July as it ran up to resistance Friday. The free version with a gap fill is dividend adjust so actually it is still open. As it moves higher this time both the RSI and MACD are rising, supporting a break higher. The Bollinger Bands® are rising as well, giving it room to run. There is resistance at 118 and 119.75 followed by 122.50 and 124 before 128. Support lower comes at 115.25 and 113.30 followed by 111.80 and 108. Short interest is moderate at 3.8%. Enter long on a move over 118.25 with a stop at 116. AS it moves over 120 move the stop to break even and then to a $2.50 trailing stop over 120.75. Take off 1/3 on a stall at 128 or higher. As an options trade consider the March 120 Calls ($2.00) and trade them like the stock trade. Offset some cost by selling the March 110 Puts ($1.00) and the February 120 Calls (25 cents).

Tractor Supply, Ticker: $TSCO

Tractor Supply, $TSCO, drove higher off of the October bottom into a plateau around 78 in December, before moving up again. The last 2 weeks have seen consolidation under resistance at 83.70…..until it broke above on Friday. The RSI is bullish and moving higher with a MACD turning up after avoiding a cross down. The target on this leg is around 99, very near the round number at 100. There is any last resistance at 85.67 and then free air above. Support lower comes at 83.70 and 82 followed by 81 and 78.60 before 74.80. Short interest is moderate at 4.1%. Enter long now (over 83.70) with a stop at 81.50. As it moves over 85.50 move the stop to a $2.50 trailing stop and take off 1/3 on a stall at 99 or higher. As an options trade consider March 85 Calls ($1.95) and trade them like the stock trade. You can sell the March 80 Puts (90 cents) to lower the cost, but be ready to hedge or own the stock there.

Up Next: Bonus Idea

The Best

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, heading into a shortened February Options Expiration week sees the equity markets looking strong, breaking long consolidations to the upside.

Elsewhere look for Gold to lower in the short term in the longer consolidation while Crude Oil consolidates, and may be ready to reverse higher. The US Dollar Index looks to continue in a consolidation range while US Treasuries are biased lower. The Shanghai Composite looks to continue to pullback in the uptrend and Emerging Markets look to hold in the bear flag, and might prove it a reversal higher.

Volatility looks to remain subdued and now drifting lower, keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts all look strong on both the daily and weekly timeframes. If you had to pick a weakness then the gaps in the QQQ chart and move out of the Bollinger Bands® may signal short term exhaustion not seen in the SPY and IWM. Use this information as you prepare for the coming week and trad’em well.

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