Top Trade Ideas for the Week February 23, 2015: Bonus Idea

• Posted by Greg Harmon
• on February 23rd, 2015

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

Celgene, $CELG, made a top at 124.25 in January before pulling back. Making a double bottom at 114, it is now advancing on the prior high. A break over the top carries a target on a Measured Move to 135 and there is no prior resistance in the way.

The momentum indicators support the continuation higher. The RSI is into the bullish zone and rising. The MACD is rising as well and just crossed up, a buy signal. If the Bollinger Bands® opened to the upside it would be unanimous. Support lower comes at 120 and 115.50 before 110 and 105.25. Short interest is low at just 1.4% and the company is expected to report earnings next on April 23rd before the market opens.

The stock has weekly options with $1 Strikes all the way out to the April 2 Expiry. Most of the open interest in that time span is in the March Expiry and largest by far at the 125 Strike. Shorter in, the weekly 123 Calls have big open interest this week and then the 125 Calls for next week.

Celgene, Ticker: $CELG

Trade Idea 1: Buy the stock on a move over 124.25 with a stop 122.50.
A straight stock buy with a stop loss for protection.

Trade Idea 2: Buy the February 124 Calls (offered at $1.50 late Friday).
A low cost defined risk way to participate in a move higher.

Trade Idea 3: Buy the February 123/125 1×2 Call Spreads for free.
A levered way to participate in upside looking for 125 to cause a stall.

Trade Idea 4: Buy the March 120/125 1×2 Call Spreads for free.
A levered way to participate in the upside and a possible pin in March.

Trade Idea 5: Buy the March 120/125/130 Call Butterfly for $1.30.
Participate in the same move and possible pin at 125 in March, but without using margin.

Trade Idea 6: Sell the March 125 Straddle for a $7.50 credit.
A non-directional trade that makes a profit should the price be between 117.50 and 132.50 on March Expiry.

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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, heading into the end of February sees the Equity markets as strong moving out of consolidation higher.

Elsewhere look for Gold to continue lower in the short term while Crude Oil continues to consolidate after its bounce. The US Dollar Index also looks to continue to consolidate sideways while US Treasuries are biased lower. The Shanghai Composite and Emerging Markets are both consolidating with a bias to break that to the upside.

Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ, despite the moves higher this week. Their charts also suggest more upward price action on both the daily and weekly view. This is the first week in a while that all 3 Index ETF’s have looked strong. 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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