4 Trade Ideas for Honeywell: Bonus Idea

Honeywell, $HON, took two step drop, like he market, to a low at the end of December. Since then it rose back higher, breaking over the November peak in February. It continued for 2 more weeks and then met resistance and pulled back. It retested the break out area and held, reversing and heading back higher. It is now approaching the all-time high from the beginning of October.

The RSI is rising in the bullish zone again after resetting lower. The MACD is flat and positive also having reset lower. The Bollinger Bands® have opened to the upside and price is riding the Upper Band higher. There is no resistance above 161.50. Support lower comes at 156 and 154.50 then 153 and 150.50. Short interest is low under 1%. The company is expected to report earnings next on April 18th before the open. The stock pays a dividend with a 2.06% yield but likely will have an ex- date in mid May.

Looking at the options chains, the April 5 weekly chain has been lightly traded but has biggest open interest at the 160 calls above. The April monthly chain shows biggest open interest at the 145 strike on the put side. It is almost 6 times bigger at the 160 call strike though. The at-the-money straddle suggests a $5.50 move by expiry, for a range of 153.50 to 164.50. May options have little open interest. June options have open interest focused from 155 to 165 on the call side and from 135 to 150 on the put side.

Honeywell, Ticker: $HON

Trade Idea 1: Buy the stock now (over 158.50) with a stop at 155.50.

Trade Idea 2: Buy the stock now (over 158.50) and add an April 157.50/152.50 Put Spread ($1.46) while selling the May 165 Calls ($1.05) to fund it.

Trade Idea 3: Buy the April 160/165 Call Spread ($2.00) and sell the April 152.50 Put (80 cents).

Trade Idea 4: Buy the May 150/165 Bull Risk Reversal (25 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 with the books closed on the 1st Quarter saw equity markets have a great 3 months but end the Quarter short of their all-time highs.

Elsewhere look for Gold to continue lower while Crude Oil pauses in its uptrend. The US Dollar Index looks to move up in the broad consolidation while US Treasuries are breaking higher. The Shanghai Composite and Emerging Markets are consolidating their gains.

Volatility looks to remain low easing pressure on the equity index ETF’s SPY, IWM and QQQ. Their charts are mixed now with the QQQ in a solid uptrend while the SPY consolidates sideways, with the IWM pulling back in a long bull flag. 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.