Top Trade Ideas for the Week of July 28, 2014: Bonus Idea

• Posted by Greg Harmon
• on July 28th, 2014

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

Nuance Communications, Ticker: $NUAN

Nuance Communications, $NUAN, traced out a bearish Bat harmonic and pulled back nearly 38.2% of the pattern before turning back higher last week. This gives a natural stop loss level just under last week’s low at about 17.50 and the rising 50 day SMA to trade long against. The RSI is heading back higher and held in the bullish zone on the pullback as the MACD is turning back up and near a cross. Both support the upside continuing. An AB=CD pattern would target a move higher to 22. There is resistance at 18.55 and 19 before 19.50 and 20. Support lower may come at 17.50 and then 17.30 and 17 before 16.50. Short interest is elevated at 7% and there is large open interest at the 20 Strike on the Call Side in August and the 17 Strike on the Put side. The company reports earnings August 11th.

Trade Idea 1: Buy the stock with a stop at 17.30.

Trade Idea 2: Buy the August 18 Calls (offered at 95 cents late Friday).

Trade Idea 3: Buy the August 18/20 Call Spread (70 cents).

Trade Idea 4: Buy the August 18/20 Call Spread and Sell the August 17 Put (40 cents).

Trade Idea 5: Buy the August 18/20 1×2 Call Spread (45 cents).

Trade Idea 6: Buy the August 18/20 1×2 Call Spread and sell the August 17 Put (5 cents).

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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 last days of July, sees the Equity Indexes again are mixed. Elsewhere look for Gold to continue lower in its consolidation while Crude Oil slowly climbs in its broad consolidation. The US Dollar Index is breaking higher and looks to continue in the short run while US Treasuries continue to look good to the upside. The Shanghai Composite and Emerging Markets are also biased to the upside now with the risk that Emerging Markets find resistance. Volatility looks to remain at low levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. There chart paint a mixed picture though with the QQQ looking strong and ready to continue higher while the SPY consolidated in the uptrend and the IWM pulls back in the consolidation range. Use this information as you prepare for the coming week and trad’em well.

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