Here is your Bonus Idea with links to the full Top Ten:
Costco (NASDAQ:COST), $COST, had a strong run higher from an April low, moving through resistance in June to a top in September. It fell back from there and settled into the earnings report. That led to a gap down to the 100 day SMA last week. Friday saw it try to break the week long consolidation to the upside.
The RSI is moving back higher off of an oversold condition with the MACD turning up, towards a cross up. There is resistance at 231.75 and 236.75 then a gap to fill to 241 followed by 245. Support lower comes at 219 and 215 then 207 and 200. Short interest is low at 1.4%. The stock pays a 1% dividend and will trade ex-dividend near the end of November. The company is expected to report earnings next on December 12th.
The October options chain shows the biggest overlapping open interest at the 230 strike, with size on the put side lower at 220 and 210. On the call side it is also big at 220, 240 and 250. November options see open interest center around the 220 put and the 230 to 240 calls. The January chain is the first to cover the next earnings report. It shows big open interest at the 230 strike on both sides, as well as at the 200 put and the 240 call.
Costco, Ticker: $COST
Trade Idea 1: Buy the stock now (over 225) with a stop at 218.
Trade Idea 2: Buy the stock now (over 225) and add a November 220/200 Put Spread ($2.70) for protection while selling a January 250 Call ($2.07) to help fund it.
Trade Idea 3: Buy the October/January 230 Call Calendar (7.50). As the October calls expire look to sell November Calls.
Trade Idea 4: Buy the November 230/240 Call Spread ($3.35) and sell the November 200 Put (60 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 saw that the equity markets had their worst week and deepest correction since the February and March pullbacks.
Elsewhere look for Gold to rise in the short term while Crude Oil pulls back in its uptrend. The US Dollar Index continues to mark time sideways while US Treasuries are bouncing in their downtrend. The Shanghai Composite looks weak as it makes 4 year lows and Emerging Markets may be ready to reverse their downtrend.
Volatility looks to remain elevated keeping the bias lower for the equity index ETF’s SPY (NYSE:SPY), IWM and QQQ. Their charts show short term trend changes to the downside and are close to longer term trend changes as well. The IWM is now over 11% off its high and looking the worst, while the QQQ has bounced after dropping more than 10%. The SPY also bounced, after a smaller 8% pullback. 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.