Here is your Bonus Idea with links to the full Top Ten:
Wells Fargo (NYSE:WFC), rose off of the October low but has struggled at resistance just under 56. But back at that level for the third time and from progressively higher lows it looks good for a technical break out higher. The Ascending triangle it has built since October would target a move to 65.10 on a break out higher.
The momentum indicators are supportive of the upside as well. The RSI is bullish and rising while the MACD has turned back up and near a bullish cross. The expanding Bollinger Bands® after the squeeze are also a good sign.
There is support lower at 54 and then 52.75 followed by 51.85 and 50.50. And there is no resistance higher over 56. Short interest is low under 1% and the company is expected to report earnings next April 14th before the market opens.
This stock has weekly options to trade and the March Expiry Friday sees very large Open interest at the 55 Strike Call. This is 50% more than the 52.50 Call Strike and 3 time the next largest at the 56 Strike Call. This could easily stay in the 55 to 56 range this week and push these ideas into next week.
Wells Fargo:
Trade Idea 1: Buy the stock on a move over 56 with a stop at 54.25.
A straight stock trade.
Trade Idea 2: Buy the March 55/56 Call Spread (offered at 53 cents late Friday).
Participation this week for a possible pin at 56 Friday.
Trade Idea 3: Buy the March 55/56 Call Spread and sell the March 55 Put (27 cents).
Adding leverage to the call spread above and relying on the large open interest at 55 to protect the downside.
Trade Idea 4: Buy the March April 55/March 55.50 Call Diagonal ($1.00).
For a longer term upside run into earnings, with protection this week from the large open interest at 55.
Trade Idea 5: Buy the Stock on a move over 56 and add an April 55/52.5 Put Spread (70 cents) and sell a July 60 Covered Call (44 cents).
A longer term trade or investment with protection to 52.50 through earnings in April.
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 the March Options Expiration week the equity markets are a bit mixed, mostly better looking to the downside.
Elsewhere look for gold to continue lower along with Crude Oil next week. The US Dollar Index may consolidate in the uptrend but has a clear bias higher while US Treasuries are biased lower. The Shanghai Composite is trying to break consolidation to resume the uptrend while Emerging Markets are biased to the downside still.
Volatility looks to remain subdued but above the low range of the early 2014 keeping the bias higher for the equity index ETF’s SPDR S&P 500 (ARCA:SPY), iShares Russell 2000 Index (ARCA:IWM) and PowerShares QQQ (NASDAQ:QQQ), but with the wind easing at their backs. Their charts all are consolidating in the short run with the bias to the upside for the IWM while to the downside for the SPY and QQQ. The long term uptrend remains intact for each though. Use this information as you prepare for the coming week and trad’em well.
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.