Here is your Bonus Idea:
It is about to be that time of year again. UPS is at your door every day delivering packages from Amazon of stuff you bought from Instagram using your PayPal account while you were binge watching something on Netflix. What do they all have in common? Almost all of them will come with those plastic bags filled with air to keep your stuff safe. Welcome to the world of Sealed Air, $SEE.
Sealed Air saw its stock make a top in the middle of 2015. It since made a lower high in April 2016 and then fell back into a range for 28 months. In August this year it broke that rang to the downside briefly, before retracing back inside. It broke down again in September, and this time kept moving lower. It found support at the end of October and has been recovering since. Last week it stalled as it closed the final gap down.
Coming into the new week it has a rising RSI, near a move into the bullish zone, with the MACD crossed up and heading higher. There is resistance at 35.50 and then 38.70 before 40, a retest of the expanding wedge. Above that 42 would be next. Support lower comes at 33.50 and 32.50 then 30.75. Short interest is moderate at 6.7%. The company reports earnings next on February 6th. The stock pays a 1.8% dividend and starts trading ex-dividend on December 6th.
The November options chain shows very big open interest at the 44 call strike. That is a lot to ask in 1 week. December options show the biggest open interest at the 36 strike on the call side. The January chain has big open interest at the 33 put and the 44 call, but some size also at the 37 and 41 call. You have to go to the April chain to cover the next earnings report and the open interest there is the biggest in all chains. The put side is biggest at the 35 strike, while on the call side it is biggest at the 41 strike and then sizable at 37 and 40.
Trade Idea 1: Buy the stock on a move over 35.75 with a stop at 34.
Trade Idea 2: Buy the stock on a move over 35.75 and add a December 35/32 Put Spread (95 cents) for protection while selling the April 40 Calls (60 cents) to lower the cost.
Trade Idea 3: Buy the January 33/37 bullish Risk Reversal for 5 cents.
Trade Idea 4: Sell the April 35/41 Strangle for a $2.50 credit.
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 November Options Expiration sees the equity markets showed a good bounce on the week but with a weak finish Friday.
Elsewhere look for Gold to consolidate its move higher while Crude Oil continues to move lower. The US Dollar Index is resuming its move higher while US Treasuries are pausing in their downtrend. The Shanghai Composite and Emerging Markets may be pausing in their downtrends.
Volatility continues to settle down in a slow fade, removing some downward pressure on equities, but it remains slightly elevated. The equities themselves are mixed with the SPY strongest and in a short term uptrend, while the IWM is pausing in its move higher and the QQQ is the weakest but broadly consolidating after the pullback. Use this information as you prepare for the coming week and trad’em well.