Dunkin’ Brands, $DNKN, started higher in April 2018, and reached a top in September. It had a mild drop from there and consolidated in a box for 3 months before another move lower. That retraced 78.6% of the up move into the end of December. Since then it has driven higher and is creating higher lows against resistance. Friday it ended pushing over resistance.
The RSI is pushing up into the bullish zone and the MACD is rising and positive, both supporting more upside. There is resistance at 71.75 then 73.50 before 75 and 77.25. Support lower comes at 70 and 68.50. Short interest is moderate at 6.4%. The stock pays a 2.09% dividend and it will begin trading ex-dividend on March 8th. The company is expected to report earnings next on April 24th.
The March options show large open interest at the 60 put strike and then again at the 75 and 80 call strikes. The April chain shows open interest just starting to build. The June options are the first to cover the next earnings report and they show the biggest open interest at the 70 strike on both the puts and calls.
Dunkin’ Brands, Ticker: $DNKN
Trade Idea 1: Buy the stock on a move over 71.75 with a stop at 70.
Trade Idea 2: Buy the stock on a move over 71.75 and add a March 70/67.50 Put Spread (60 cents) while selling the June 80 Calls (60 cents) to fund it.
Trade Idea 3: Buy the April/June 75 Call Calendar ($1.20) and sell the April 65 Put (50 cents).
Trade Idea 4: Buy the June 65/75/80 Call Spread Risk Reversal (35 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 last week of February sees the equity markets continuing to look strong but also continuing to remain below an all clear level.
Elsewhere look for Gold to possibly pause in its uptrend while Crude Oil resumes the path higher. The US Dollar Index looks to continue to move sideways while US Treasuries are consolidating at resistance. The Shanghai Composite and Emerging Markets are continuing their trends higher.
Volatility looks to remain very low keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts are looking a little extended but strong on the shorter timeframe, but remain very strong on the longer timeframe. 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.