Here is your Bonus Idea with links to the full Top Ten:
Salesforce.com (NYSE:CRM), has been trending higher in a wide channel for at least a year. More recently, the stock price moved off of a bottom near 56 in February to a high at 71 in just a few days. Since then the price action has consolidated in a symmetrical triangle. Friday it tested the top of the triangle but failed to break over the top. A break of the triangle carries a target of 76.50 and there is a Measured Move higher to 78 from the move into the consolidation.
There is resistance at 69 and 69.85 followed by 71. Support lower comes at 67 and 65.70 followed by 63.60 and 62. The momentum indicators give some support to the bullish case. The RSI is in the bullish zone, although moving sideways with a current downward tilt. The MACD is testing a cross up, which would be bullish, after resetting lower. The Bollinger Bands® have tightened, often a precursor to a move in the stock price.
The company reports earnings next May 19th, after the market close or May 18th depending on where you look, and short interest is moderate at 3.9%. The May 1 Expiry options chain shows large open interest at the 67 Put Strike and the 70 Call Strike, while looking beyond earnings at the May 22 Expiry chain shows most of the open interest to the upside at the 70.50 and 71 Strikes.
Salesforce.com Inc (NYSE:CRM)
Trade Idea 1: Buy the stock on a move over 69 with a stop at 67.
A straight stock purchase.
Trade Idea 2: Buy the May 1 Expiry 69 Calls (offered at 50 cents late Friday).
A defined risk trade, with only the premium spent at risk.
Trade Idea 3: Buy the May 1 Expiry 69/70 Call Spread (31 cents) and sell the May 1 Expiry 66 Puts (29 cent credit).
Adding leverage and capping the upside,, this trade offers a nearly 50:1 reward to risk ratio.
Trade Idea 4: May 22 Expiry 69/71 1×2 Call Spread (50 cent credit).
Gives the stock more time to move and a wider range still with a 4:1 reward to risk ratio.
Trade Idea 5: Buy the May 22 Expiry 69/76 Call Spread ($1.85) and sell the May 22 Expiry 63.50 Put ($1.12 credit).
Covers nearly the full measured range and adds leverage with protection below the triangle consolidation. This gives a 9.5:1 reward to risk ratio.
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 the last week of April, sees the equity indexes looking strong on the weekly timeframes and a bit mixed on the short term view.
Elsewhere look for Gold to continue lower while Crude Oil rises towards a major character change area. The US Dollar Index looks to continue to consolidate the large move higher while US Treasuries are biased lower in the short term in their uptrend. The Shanghai Composite and Emerging Markets are biased to the upside with risk of the Chinese market becoming overheated at any point.
Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s ARCA:SPY, ARCA:IWM and NASDAQ:QQQ. Their charts all look higher ion the weekly timeframe but on the daily timeframe the QQQ may be a bit stretched while the IWM and SPY test resistance but with some strength. Use this information as you prepare for the coming week and trad’em well.
DISCLAIMER: 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.