Here is your Bonus Idea with links to the full Top Ten:
Hewlett-Packard (HPQ) made a 4 year high to start the year. And it has been downhill since then. The chart below shows a descending channel for all of 2015. Actually, not really a channel, as it is getting marginally tighter as it falls, a falling wedge.
The price broke above that wedge two weeks ago and quickly settled into a bull flag. The wedge break gives a target to the upside of 35, and a move out of the bull flag would target 34 as shown.
The momentum indicators are both bullish, with the RSI holding over 60 in the flag and the MACD just starting to level. The Bollinger Bands® are open to the upside for more room to run higher too.
There is resistance at 29.30 and 30 followed by 31 and 33 before 34 and 35.30 with a gap to fill higher to 38. Support lower comes at 28.50 and 26.90 followed by 25.50. Short interest is low under 2% and the company is not expected to report earnings until at least November 24th.
Looking at the options activity, the weekly chain has large open interest at the 26.5 and 26 Put Strikes below, and smaller size at 30 and 30.5 on the Call side above. The November chain shows very large open interest at the 30 Strike on both sides, with more open interest above on the Call side at 31 and 32 after that. The November 27 Expiry options, just past the earnings report, have little open interest at this point.
Hewlett-Packard
Trade Idea 1: Buy the stock on a move over the flag, over 29.30 with a stop at 28.40.
A straight stock trade idea.
Trade Idea 2: Buy the November 29 Calls, offered at $1.09 late Friday, and trade them like the stock trade.
A controlled risk method of participating in the upward price movement.
Trade Idea 3: Buy the November 29/30 Call Spread and sell the November 27 Put for free.
A leveraged trade idea for a small quick move.
Trade Idea 4: Buy the November 29/October 30 Expiry 29.5 Call Diagonal for 70 cents.
A lower cost method of a defined risk trade. If choose this look to sell each week a call as the October 30th calls expire or roll them up and out.
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, with October Options Expiration behind sees the Equity Markets looking stronger.
Elsewhere look for gold to pullback in the short term in its uptrend, while crude oil rises. The US dollar index is biased lower in consolidation, while US Treasuries have a short term bias higher in their consolidation. The Shanghai Composite and Emerging Markets are biased to the upside with risk of the Emerging Markets hitting long term resistance.
Volatility is back to the normal range and falling putting the bias higher for the equity index ETFs N:SPY, N:IWM and O:QQQ. After strong back halves of the week, the SPY and QQQ look as if they may be ready to reverse the downward August trend and resume higher, while the IWM remains in a consolidation zone. 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.