Here is your Bonus Idea with links to the full Top Ten:
EMC Corporation (NYSE:EMC) has some shared history with me. Founded in Newton MA (I owned a home there) and now headquartered in Hopkinton, MA (I owned a home there too) it is a role model to the Route 128 Technology beltway around Boston. Recently though there seems to be as much or maybe even more attention paid to one of its subsidiaries, VM Ware. But back in the day……
Actually that has been a theme recently of old school technology companies making a comeback in the stock market. Why not EMC² as well? The stock did make a run at it over the back half of 2014. But that failed with a high in December that led to a pullback to a retouch at the 25 level from May 2014 that began the move. The trip lower looked like a falling channel except for a failed break down at the end of January. But since touching that 25 level again it has regained some strength.
Just last week it broke above the falling channel and started higher. It ended the week at resistance from the high in April, but with the Bollinger Bands® opening higher while the RSI improves in the bullish zone and the MACD has crossed up and is rising. All of these support more upward price action. And a break above that resistance would trigger a Measured Move to 29. From there technically it would trigger a bearish Shark harmonic but with a Potential Reversal Zone (PRZ) I up at 30.29 and PRZ II at 31.63 should it continue.
The options market shows large open interest at the 27 and 27.5 Call Strikes this week, suggesting that it may stay in this range for a week. And the June open interest is also large at 27 but sizable at 28 and 29 as well. On the Put side the June contract has large open interest at 25.50 below. Moving to July, the peak open interest is at 28. So there is not much movement expected from the options market for a while. Short interest is low at only 1.5% and the company is expected to report earnings again next of July 22nd, after July Expiry.
EMC Corporation, Ticker: EMC
Trade Idea 1: Buy the stock on a move over 27.40 with a stop at 26.85.
A straight stock trade.
Trade Idea 2: Buy the stock on a move over 27.40 and add a collar, buying the July 24 Expiry 27/26 Put Spread, and selling the August 29 Call (5 cent credit).
Adding defined protection for earnings in July and removing the cost with a covered call sale.
Trade Idea 3: Buy the July 28 Call (47 cents).
Defining risk to the premium paid.
Trade Idea 4: Buy the August 25/28 bullish Risk Reversal (46 cents) and sell the July 29 Call (20 cents).
A levered trade in August with risk of owning the stock at 25, the bounce point, and lowering the cost with short term upside cap at large open interest in July.'
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 next week sees the equity markets continuing to look a bit vulnerable on the daily timeframe but strong on the weekly timeframe.
Elsewhere look for gold to continue lower while crude oil consolidates with a slight downward bias. The US Dollar Index also is in broad consolidation with an upward bias while US Treasuries look to continue lower. The Shanghai Composite is back off to the races higher with a chance of consolidation while Emerging Markets look to continue to the downside.
Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s ARCA:SPY, ARCA:IWM and NASDAQ:QQQ. Their charts suggest that the IWM is strong and taking over leadership while the QQQ looks strongest on the longer timeframe. The SPY may need more sideways consolidation before resuming higher. 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.