Top Trade Ideas for the Week of January 6, 2014: Bonus Idea

• Posted by Greg Harmon
• on January 6th, 2014

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

Citigroup, Ticker: $C

Citigroup, $C, has been consolidating in an ascending triangle since late May with the top resistance at 53.60. Now at the top and continuing to tighten it has a target of 61.85 on a break higher. The Relative Strength Index (RSI) is bullish and rising and the MACD is moving higher, both supporting more upward price action. There is resistance at 66.85 and 83.25, both from 2008. Support lower comes at 51.80 and then 50.50 followed by 48.20, 47.60 and 45.35. Open interest for the regular January contract falls off substantially after the 55 strike.

Trade Idea 1: Buy the stock on a move over 53.60 with a stop at 51.60.

Trade Idea 2: Buy the January 24 Expiry 53.5 Calls (offered at $1.17 late Friday) on the same trigger.

Trade Idea 3: Buy the January/February 55 Call Calendar (64 cents).

Trade Idea 4: Buy the February 50/55 Bullish Risk Reversal (52 cents).

Disclosure: I am long a January 2015 Expiry 47/60 Bullish Risk Reversal that I bought for 5 cents on November 25th and see this stock as a strong long term play as well. I picked it as my Investorplace Best Stock of 2014 in this year’s contest. You can read my long term view here.

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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 first full week of 2014 begins sees the markets showing signs of rotation again. Look for Gold to continue to bounce in its downtrend while Crude Oil continues lower. The US Dollar Index looks content to move sideways with an upward bias while US Treasuries consolidate with a bias lower. The Shanghai Composite and Emerging Markets are biased to the downside with the possibility that the Chinese market continues to consolidate. Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts show that the SPY and IWM are consolidating their gains with slight pullbacks and look solid, with the slight edge to the IWM, while the QQQ is pulling back and may do so a bit longer still. 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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