Alphabet, $GOOGL, rose out of a descending triangle in September. It kept going higher until it reached a top in January. From there it pulled back to the 200 day SMA in February before a bounce. The bounce topped out at a lower high at the end of February and it dropped again, but to a higher low. Another bounce brought it over the prior high triggering a bearish Butterfly harmonic, with a Potential Reversal Zone at 1240 above. It also moved into the gap.
The RSI is into the bullish zone with the MACD rising and positive. The Bollinger Bands are also turning higher. There is resistance at 1170 and 1200. Support lower comes at 1143 and 1104 then 1085 and 1050. Short interest is low under 1%. The company is expected to report earnings next on April 25th.
The March options show the biggest open interest at the 1180 strike on the call side. In the April options open interest is large at the 1180 strike but bigger at 1200 on the call side. The April 27 Expiry Calls, covering the earnings report, are just getting started but show an expected move of $85 between now and expiry.
Trade Idea 1: Buy the stock now (over 1143) with a stop at 1130.
Trade Idea 2: Buy the stock now (over 1143) and add an April 27 expiry 1145/1100 Put Spread ($16.50) for protection, selling a May 1260 Call (15.90) to pay for it.
Trade Idea 3: Buy the April 27 Expiry 1170/March 29 Expiry 1180 Call Diagonal ($30). Look to sell further short term calls as the March 29 Calls expire.
Trade Idea 4: Buy the April 1100/1170/1200 Call Spread Risk Reversal ($3).
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 March options expiration week sees the equity markets looking strong, with the QQQ at all-time highs and the IWM and SPY near their highs and almost out of danger.
Elsewhere look for Gold to consolidate in a broad range while Crude Oil consolidates with a longer term bias lower. The US Dollar Index is treading water in a downtrend while US Treasuries consolidate in their downtrend. The Shanghai Composite and Emerging Markets are both consolidating, the former from a bounce and the latter at the highs.
Volatility continues to drift lower easing the path for equities. The equity index ETF’s SPY, IWM and QQQ all posted stellar performance for the week, printing bullish Marubozu candles, with the QQQ ending at all-time highs. The SPY and IWM are close to new highs and should they print them the all clear signal will sound for equities. 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.