Top Trade Ideas for the Week of November 25, 2013: Bonus Idea

• Posted by Greg Harmon
• on November 25th, 2013

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

Citigroup, Ticker: $C

Citigroup, $C, ran higher from July 2012 until starting to consolidate in June 2013. The consolidation in a symmetrical triangle has been going on for 6 months. With the bank stocks breaking higher and the support of a rising RSI making new 6 month highs and a MACD that is rising, it is worth preparing for as it approaches the top of the triangle. A move over the top carries a Measured Move higher to 59.75 and then to 73. Support lower comes at 50 and 47.75 followed by 45.30. There is resistance higher at 53.35-53.65 and then it has a lot of free air higher. How much? Look at the monthly chart to see. The price action since the financial crisis bottom has been a tight consolidation. A move over 58 would seal the confirmation of a reversal higher and the first strong resistance at 163 and then 215. Do I have your attention now?

Trade Idea 1: Buy the stock on a break over 53.65 with a stop at 52.

Trade Idea 2: Buy the January 52.5 Calls (offered at $1.80) on a break over 53.

Trade Idea 3: Buy the January 52.5/57.5 Call Spread ($1.50) on a move over 53.

Trade Idea 4: Buy the December/January 55 Call Calendar (55 cents) on a move over 53.

Trade Idea 5: Buy the January 2015 60 Calls ($2.99) or January 2016 60 Calls ($5.35). sell the same expiry 45 Strike Put for a bullish Risk Reversal at just the cost of the margin use and 20 cents out of pocket.

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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 shortened Holiday week, sees the markets looking healthy. In the coming week look for Gold to continue lower while Crude Oil consolidates and may reverse higher. The US Dollar Index remains biased to the upside while US Treasuries are biased lower. The Shanghai Composite and Emerging Markets are biased to the upside with risk of Emerging Markets running in place. Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. All continue to look better to the upside but the IWM looks the strongest of the Index ETF’s with the SPY and QQQ raising some caution flags on the weekly charts. Use this information as you prepare for the coming week and trad’em well.

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