Here is your Bonus Idea with links to the full Top Ten:
Johnson & Johnson, $JNJ, started to move to the downside in January. A fast drop brought it to a short term bottom in February and it bounced. It consolidated for 2 months and then drifted lower to a bottom in June. Since the start of July it has started moving higher. At the end of last week it was testing the April bounce high at the 200 day SMA.
The RSI is rising in the bullish zone with the MACD moving up and the price riding the Bollinger Bands® higher. There is resistance at 132 and 135.50 then 139 and 142 before 145.50 and 148. Support lower comes at 130 and 125. Short interest is low under 1%. The company is expected to report earnings next on October 16th. The stock pays a 2.74% dividend and starts trading ex-dividend on August 27th.
The August monthly options chain shows open interest the biggest at the 125 strike on the put side and then 120. On the call side it is big at 125 and 130. The September chain shows open interest spread from 135 down to 120 on the put side and bigger from 130 to 140 on the call side. The October chain, covering the earnings report, show the 120 strike the biggest open interest on the put side. On the call side it is biggest at 135.
Trade Idea 1: Buy the stock on a move over 132 with a stop at 129.
Trade Idea 2: Buy the stock on a move over 132 and add an August 129 Put (86 cents) as protection. Sell a September 7 Expiry 136 Call (75 cents) to pay for most of the protection.
Trade Idea 3: Buy the August/October 135 Call Calendar ($1.77) and sell the September 120 put (47 cents) to lower the cost.
Trade Idea 4: Buy the October 120/135/140 Call Spread Risk Reversal (50 cents).
After reviewing over 1,000 charts, I have found some good setups for the week. This week’s list contains the first five below to get you started early. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which as the last full week of July ended saw the equity markets looking tired on the shorter timeframe but remained solid on the longer one.
Elsewhere look for Gold to consolidate in the downtrend while Crude Oil shows signs of reversing higher at support. The US Dollar Index continues to mark time moving sideways while US Treasuries pullback in consolidation. The Shanghai Composite may be stalling in its bounce in the downtrend while Emerging Markets are building strength for a possible reversal higher.
Volatility looks to remain at very low levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts are showing a lack of energy or maybe even some weakness in the short term, especially in the QQQ and IWM. All look stronger and remain in the uptrends on the longer timescale. 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.