Top Trade Ideas for the Week March 9, 2015: Bonus Idea

• Posted by Greg Harmon
• on March 9th, 2015

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

Ciena, $CIEN, built a bearish Bat harmonic through the fall into year end. It completed the pattern and then retraced 38.2% before the current leg higher. During this reset the RSI held in the bullish zone and the MACD held over zero. Bullish. Now the price is back at resistance from August and consolidating. The Bollinger Bands® are opening to the upside and turned higher. A positive.

The Measured Move from the prior leg targets a move to 23.70 while the move from the February low to consolidation targets the same area. To really clog things up, there is also a Inverse Head and Shoulders pattern that carries a price objective of at least 26.65. Momentum, Volatility, Classical Technical Analysis, Harmonic Analysis and a Measured Move all point higher and to at least 23.70 and possibly 26.65.

When you get a Mosaic of technicals lining up then you know that many different traders and styles of trading will see this a positive trading vehicle. There is resistance at 21.20 and 22 followed by 22.50 and 23.25 before 24 and 25.10. Support lower may come at 20.50 and 20 before 18.50. Short interest is high at over 16% and the company just reported earnings last week. Their next report will be in June.

Ciena, Ticker: $CIEN

Trade Idea 1: Buy the stock on a move over 21.20 with a stop at 20.50.
A straight stock trade.

Trade Idea 2: Buy the April 2 Expiry 21 Calls (offered at 75 cents late Friday).
A defined risk way to participate in the upside.

Trade Idea 3: Buy the April 2 Expiry 21/March 22 Call Diagonal (60 cents).
A lower cost way to participate in the upside looking for the price to stay below 22 by March Expiry.

Trade Idea 4: Buy the April 21/24 Call Spread (81 cents).
A simple spread with time to move higher.

Trade Idea 5: Buy the April 21/24 Call Spread and sell the March 20 Puts (70 cents).
The same spread but with some leverage and protection from the large open interest at 20 in March.

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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 next week sees the equity markets looking vulnerable.

Elsewhere look for Gold to continue lower while Crude Oil churns in a consolidation zone. The US Dollar Index looks to continue higher while US Treasuries continue lower. The Shanghai Composite looks to continue its broad consolidation with a short term downside bias and Emerging Markets are biased to the downside.

Volatility looks to remain low keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts look better to the downside though with the SPY the weakest and the IWM and QQQ a bit stronger on the longer timeframe. Use this information as you prepare for the coming week and trad’em well.

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