Here is your Bonus Idea with links to the full Top Ten:
Yum Brands (NYSE:YUM) made a high just under $100 in May of 2015. From that point the stock started to pullback, losing 33% of its value before it was done. The downtrend morphed into a bottoming consolidation in October 2015 that lasted until the beginning of March. That is when the rise off of the ultimate low broke above the prior resistance. It continued higher to a consolidation that has been in place for the last 2 weeks.
This consolidation is happening right at the gap down spot from October. The gap has been filled. It is also happening just under the 61.8% retracement of that downward leg. A push through resistance gives a short term target of 85.50 on a Measured Move higher. The full price action since May 2015 has also traced out a bearish Shark harmonic, but with a Potential Reversal Zone (PRZ) at 92.50 above. This is your intermediate term target.
The momentum indicators are bullish but showing possible signs of fading. The RSI is strong but the MACD has crossed down, but is well into positive territory. Also note that the 50 day SMA is heading up for a Golden Cross up through the 200 day SMA. There is resistance higher at 82.50 and 83.50 followed by 86.50 and 89.75 before 93. Support lower comes at 80.60 and 76.70 before 75. Short interest is low at just over 2% and the company is due to report earnings after the close April 20th. The stock also goes ex-dividend April 13th.
The options chains see weekly expirations for Yum. The April chain sees very large open interest on the call side compared to the put side. The biggest open interest on the Call side is at 75 and then 77.50 followed by 90 above. The Puts have biggest open interest at 90 and then below at 77.5 and 75. This would suggest a move lower this week. The April 22 Expiry sees much less open interest with the majority below the current price and biggest at 79 on the Put side and 77.5, 78 and 80 on the Call side. Out in May the open interest is focused above and at the 87.5 and 90 Strike, with some size at 82.50 and 80 as well.
Yum Brands
Trade Idea 1: Buy the stock on a move over 82.50 with a stop at 80.50.
Trade Idea 2: Buy the stock on a move over 82.50 with a April 22 Expiry 82.5/80 Put Spread and selling a May 87.5 Call. The options constitute a collar that gives protection for a $2.50 move lower and allow $5 of upside, without any cost.
Trade Idea 3: Buy a May 82.5/87.5 Call Spread ($2), and sell the April 29 Expiry 77 Put ($1) to add leverage and lower the cost.
Trade Idea 4: Buy an April 82/May 77.5 Put Diagonal (Buy April and sell May) for a 40 cent 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 April Options Expiration week sees the equity markets have stalled in some respects and may be starting to turn back lower.
Elsewhere look for Gold to continue its reversal higher as crude oil rises. The US Dollar Index looks weak and headed lower while US Treasuries are strong and rising. The Shanghai Composite looks to continue its drift higher as Emerging Markets are starting to turn lower. Volatility looks to remain subdued keeping the bias higher for the equity index ETFs NYSE:SPY, NYSE:IWM and NASDAQ:QQQ. Their charts show some weakness, especially in the SPY, with the IWM and QQQ a bit strong and consolidating, but no longer rising short term. Use this information as you prepare for the coming week and trad’em well.