Top Trade Ideas for the Week of October 21, 2013: Bonus Idea

• Posted by Greg Harmon
• on October 21st, 2013

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

BP, Ticker: $BP

BP, $BP, broke out of a year long symmetrical triangle to the upside on Friday. The target on the pattern break would take the price to 48.60. The Relative Strength Index (RSI) is bullish and rising with a MACD that is rising as well. Both support the case for higher prices. There is resistance at 43.75 and 44.00-44.20 followed by 45.25. Support lower is found at 42.75 and 42.30 followed by 41.50 and 40.85.

Trade Idea 1: Buy the stock (over 43) with a stop at 42.50.

Trade Idea 2: Buy the November 43 Call (offered at 79 cents late Friday).

Trade Idea 3: Buy the December 43 Call and sell the November 44 Call (74 cents).

Trade Idea 4: Buy the December/April 45 Call Calendar (67 cents).

Trade Idea 5: Sell the December/April 40 Put Calendar (80 cent credit).

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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 Saturday which, heading into the next week, sees that the markets are behaving strongly but showed the first sign of being extended Friday. Look for Gold to continue to bounce in the downtrend while Crude Oil continues lower. The US Dollar Index is set up to continue lower while US Treasuries are poised to show if they really want to reverse higher at resistance. The Shanghai Composite looks to continue lower in the uptrend while Emerging Markets move higher. Volatility looks to remain low and possibly continue lower keeping the wind at the backs of the US Equity markets. The SPY, IWM and QQQ are all looking very strong on the intermediate timeframe but with Evening Stars to end the week may need to close the gaps lower before continuing to advance. Use this information as you prepare for the coming week and trad’em well.

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