Aflac, $AFL, started higher in December and confirmed a double bottom by early January. It continued higher until mid-March and then topped. It consolidated the move for 6 weeks before a second move higher that brought it to a top a week ago. It digested that move last week and started to move back up Friday.
The daily chart shows the RSI turning back up after a pullback to 60 while the MACD is level and positive. There is no resistance over 52.30. Support lower comes at 51.45 and 50.60 then 49.85 and 49.25 before 48.50. Short interest is low at 1.35. The stock pays a dividend with a yield of just over 2% but just started trading ex-dividend on May 21st. The company is expected to report earnings next on July 25th.
The open interest on the options for this week suggest a tight range between 51.50 and 52.50. The June expiry chain shows the biggest open interest at the 52.50 call, but size on both sides at the 50 strike below. July options are just getting started, but the August chain, the first covering the earnings report, shows very large open interest at the 45 put and 55 call strikes.
Aflac, Ticker: $AFL
Trade Idea 1: Buy the stock on move over 52.30 with a stop at 51.30.
Trade Idea 2: Buy the stock on move over 52.30 and add an August 50/45 Put Spread (65 cents) while selling the August 55 Call (52 cent credit).
Trade Idea 3: Buy the July/August 55 Call Calendar (38 cents) and sell the August 45 Put (22 cent credit).
Trade Idea 4: Buy the July 50/52.50/55 Call Spread Risk Reversal (38 cents).
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 unofficial start of summer sees equity markets got kicked in the teeth again but continue to hang on.
Elsewhere look for Gold to consolidate in the downtrend while Crude Oil pulls back. The US Dollar Index is changing to a short term downtrend while US Treasuries continue to march higher. The Shanghai Composite and Emerging Markets look to continue to move lower.
Volatility looks to remain stable at moderate levels keeping the pressure off of for the equity index ETF’s SPY, IWM and QQQ. This allow has allowed sentiment driven by headlines to play a bigger roll. In response the QQQ is looking the weakest with the SPY and IWM finding support at prior levels. Use this information as you prepare for the coming week and trad’em well.
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.