Here is your Bonus Idea with links to the full Top Ten:
Exxon Mobil (N:XOM), had a long run lower along with the price of oil from mid 2014 until making a bottom in August 2015. Since then the stock bounced, retracing almost 60% of the drop in October. It pulled back from there as well, but made a higher low in January.
The full price action is conforming to an Andrews Pitchfork showing the trend lower. Within that pitchfork the price has been consolidating against resistance at 80.25 since mid December. A move above that would be a first step in a reversal. The next would be a break above the Andrews Pitchfork and then over the Hagopian Trigger Line would confirm a new trend higher.
Momentum indicators support this thesis, as the RSI is rising into the bullish zone and the MACD is crossed up and moving to positive. The Bollinger Bands® are also opening to allow a move. There is resistance higher at 80.25 and 82 followed by 83.40 and 86 before 87.50. Over that would make for a higher high and another form of reversal confirmation. Support lower comes at 78 and 76.50 followed by 74. Short interest is low at 1.3% and the company is expected to report earnings next on April 28th.
The options chains are active and this week expiry sees the higher open interest below the current price at 77, with some size at 82 above. The February monthly Expiry is similar with the biggest open interest at the 77.5 Strike, but size at 82.5 as well. The April Expiry sees large open interest at 70 and 60 on the put side and then building open interest on the call side from 77.50 to 90.
Trade Idea 1: Buy the stock on a move over 80.25 with a stop at 78.
A straight stock trade.
Trade Idea 2: Buy the stock on a move over 80.25 with a March 80/72.5 Put Spread/April 87.5 Covered Call ($1.60 for the collar).
Adds a collar for protection.
Trade Idea 3: Buy the April 80/February 82.5 Call Diagonal ($3.00).
Longer dated option selling shorter premium to lower the cost. Look to repeat premium sale at expiry.
Trade Idea 4: Buy the February 80/82.5 Call Spread (93 cents).
Low cost spread trade with a 2.69:1 reward to risk ratio.
Trade Idea 5: Buy the February 80/82.5 Call Spread and sell the February 75 Puts (42 cents).
Adds a short put to increase leverage, and reward to risk ratio to nearly 6:1, with risk of being put the stock at 75 in two weeks.
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. The groundhog did not see his shadow, so an early Spring is on the way, but it does not seem like winter is over for equity markets. Heading into the second week of February equity markets are weak and looking to get worse.
Elsewhere look for Gold to continue in its uptrend while Crude Oil consolidates broadly in the downtrend. The US Dollar Index looks better to the downside in consolidation in the short run while US Treasuries are continue higher. The Shanghai Composite and Emerging Markets look to continue their consolidation in their downtrends net week.
Volatility looks to remain elevated keeping the bias lower for the equity index ETF’s SPDR S&P 500 (N:SPY), iShares Russell 2000 (N:IWM) and PowerShares QQQ Trust Series 1 (O:QQQ). The indexes themselves all look weak and ready for more downside with the strongest, the SPY, trying to consolidate in its downtrend. 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.