Yum Brands, $YUM, broke higher out of consolidation in April and moved to a new all-time high at the end of the month. It gapped down to start May and drifted lower to support at the 50 day SMA. It held there, moving sideways against resistance for 3 weeks. Last week it ended by pushing over that resistance. The chart shows the RSI making a higher high as it moves through the mid line. It never broke below the bullish zone.
The MACD is about to cross up and is turning positive. The Bollinger Bands® had squeezed in and now look to be opening higher. There is resistance at 102.80 and then the all-time high at 104.40. Support lower comes at 101.80 and 100.20 then 99 and 98. The stock pays a dividend with an annual yield of 1.64% and started trading ex-dividend May 15th. The company is expected to report earnings next on August 1st.
The June options chain shows the biggest open interest at the 100 strike on both the puts and calls. July options have the biggest open interest at the 100 call and then the 105 call. The October options, the first to cover the next earnings report, are biggest at the 105 call with some size at the 110 call as well. The 85 put also has some open interest.
Yum Brands, Ticker: $YUM
Trade Idea 1: Buy the stock on a move over 102.80 with a stop at 101.
Trade Idea 2: Buy the stock on a move over 102.80 and add a June 100 Put (79 cents) while selling the July 12 Expiry 106 Call (74 cents).
Trade Idea 3: Buy the July/October 105 Call Calendar ($2.40).
Trade Idea 4: Buy the October 92.50/105 bull Risk Reversal ($2.25).
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 five months of 2019 in the books, sees equity markets have given back half of their gains from the peak at the end of April.
Elsewhere look for Gold to continue in its uptrend while Crude Oil continues lower. The US Dollar Index continues to drift higher while US Treasuries are very strong but overbought. The Shanghai Composite continues to consolidate in its downtrend while Emerging Markets may be reversing back higher.
Volatility looks to drift up putting downward pressure on the equity index ETF’s SPY, IWM and QQQ. Their charts are showing the pain in the short run and that is now moving into the weekly timeframe as well. 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.