Celgene (CELG) is beginning a move up out of consolidation at 74. The Relative Strength Index (RSI) is turning back higher after holding near 40, remaining in bullish territory, and the Moving Average Convergence Divergence indicator (MACD) is improving. A move over 76 has resistance at 77 followed by 79 and 81 before free air higher. A break below 74 carries a Measured Move down to 70 with support at 72 along the way.
Bullish Trades
1. Buy the stock on a break over 76 with a $2 trailing stop.
2. Buy the November 77.5 Calls (offered at 98 cents late Friday) on a break over 76.
3. Sell the November 72.50 Puts (91 cents) on a break over 76.
4. Buy the November 72.5/77.5 Bullish Risk Reversal (7 cents) on a break over 76, combining trades 3 and 4.
5. Buy the December 72.5/77.5 Bullish Risk Reversal (13 cents) on a break over 76, giving you an extra month.
Bearish Trades
1. Sell the stock short on a break below 74 with a $1 trailing stop.
2. Buy the November 72.5 Puts (96 cents but will be much more) on a break below 74.
3. Buy the November 72.50/70 Put Spread (50 cents) on a break below 74.
4. Sell the November 77.5/80 Call Spread (59 cent credit) on a break below 74.
5. Buy the November 72.50/70 Put Spread and sell the November 77.5/80 Call Spread (9 cent credit) on a break below 74.
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 Saturday which, heading into next week sees the markets continuing to look vulnerable. Gold is still biased lower in the channel but maybe finding a bottom while Crude Oil looks better lower.
The US Dollar Index and Treasurys seem content to move sideways with longer term bias lower. The Shanghai Composite is done with its bounce while Emerging Markets continue to consolidate. Volatility looks to remain low but is showing signs of life. These create a mixed environment for the Equity Index ETF’s SPY, IWM and QQQ, with the dollar and Treasurys supporting Equities while Volatility and Crude Oil point lower. The charts of the Indexes themselves all are biased to the downside. Use this information as you prepare for the coming week and trade’m 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.
Original post