Here is your Bonus Idea with links to the full Top Ten:
UnitedHealth Group (NYSE:UNH), stock has been on fire since the market bottom in March 2009. The entire insurance sector has done great for that matter. And heading into the week the merger activity is making things frothy. Not a bad situation for traders.
UnitedHealth Group itself has been in a consolidation pattern since mid March, under resistance at 122. Since the beginning of May the rising 100 day SMA has helped create an ascending triangle pattern, with the series of higher lows. A break above resistance would target a move to 133.
The momentum indicators are supportive of a move higher. The RSI is in the bullish zone while the MACD is rising. There is no resistance over 122. And support below may come at 119.45 and 116 followed by 111.25. Short interest is low at 1% and the company is expected to report earnings next on July 16th before the market opens.
The options chains show large open interest at the 121 Call Strike this week, but also from 113 to 117 on the Put side below. Looking at the July expiry, beyond earnings, shows very large open interest at the 125 Strike.
UnitedHealth Group, Ticker: UNH
Trade Idea 1: Buy the stock on a move over 122 with a stop at 119.
A straight stock trade.
Trade Idea 2: Buy the stock on a move over 122 and add a July 120/115 Put Spread and selling the July 31 Expiry 125 Call (collar free late Friday).
Adding a collar as protection to the stock through the earnings report.
Trade Idea 3: Buy the July 120/125 Call Spread ($2.40).
A defined risk trade looking for a move to the large open interest at 125 in July.
Trade Idea 4: Buy the July 120/125 Call Spread selling the 115 Puts ($1.20).
Adding leverage to the trade, reducing cost and opening the possibility of owning the stock on a pullback to 115.
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, as the markets head out of June Options Expiration and officially into summer sees equities continue to churn with an upward bias.
Elsewhere look for gold to be biased to the upside short term in its consolidation while crude oil consolidates with an upward bias. The US Dollar Index looks headed lower in its broad consolidation of the long move up while US Treasuries may be consolidating in their downtrend. The Shanghai Composite may be beginning its long awaited correction, or just doing its 4th 10% plus move lower before another launch higher, while Emerging Markets are biased to the may be consolidating after their move lower.
Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s ARCA:SPY, ARCA:IWM and NASDAQ:QQQ. The IWM continues to look the strongest on the short time frame as it sits at all-time highs, with the QQQ strong as well on the weekly timeframe and the SPY stuck in a funk consolidating. 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.