Here is your Bonus Idea with links to the full Top Ten:
International Paper Company (NYSE:IP) started moving higher in November and stalled as it hit $54 in early December. Since then it has moved mainly sideways in consolidation, with a brief failed attempt to push to the upside in January. The whole time it has remained over the 200 day SMA, coming close a couple of times but never below it. In mid June that ended with a push higher, closing the gap from that failed push in January.
The break out and consolidation gives 3 targets to the upside. The first is the target from the expanding wedge break to 60.40. The second is a Measured Move from the last near touch of the 200 day SMA to 62. Then the move into consolidation measured out of it gives the final target to 66. Three methods all pointing higher. Momentum as supports more upside with the RSI rising in the bullish zone and the MACD now level and positive after a short pullback. The Bollinger Bands® have also shifted up.
There is resistance at 57.10 and 58.65 then free air above. Support lower comes at 55 and 52.30 then 50.60. Short interest is low at 1.6%. The company pays a 3.27% dividend, but the stock went ex-dividend in late May so the next will be expected in late August. The company is expected to report earnings next on July 27th.
The July options chain shows the largest open interest on the put side at the 52.50 strike. There is equal size at the 52.50, 55 and 57.50 strikes on the call side. For the July 28 Expiry, after the earnings report, open interest is smaller but biggest at the 57 and 58 strikes on the call side. The August options chain shows the biggest open interest in the 55 and 57.5 calls. And the October options show large open interest from 55 to 62.50 on the call side.
International Paper, Ticker: $IP
Trade Idea 1: Buy the stock on a move over 57.10 with a stop at 55.
Trade Idea 2: Buy the stock on a move over 57.10 and add a July 28 Expiry 56/54 Put Spread (70 cents) for protection through earnings. Sell the August 60 Calls (40 cents) to lower the cost of protection.
Trade Idea 3: Buy the August 57.5/July 58 Call Diagonal ($1.00) and sell the July 55 Put (33 cents) to lower the cost and add leverage.
Trade Idea 4: Buy the August 55/57.5 bullish Risk Reversal (31 cents).
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 after tying up the second quarter and heading into the Fourth of July Holiday Weekend, sees equities have held up well, but with a first crack in the armor for the QQQ.
Elsewhere look for Gold to consolidate sideways while Crude Oil continues higher short term. The US Dollar Index is weak and looks to continue lower while US Treasuries are also biased lower after a reversal. The Shanghai Composite and Emerging Markets are biased to the upside with risk that Emerging Markets may continue to consolidate in the short run.
Volatility looks to remain at very low levels keeping the bias higher for the equity index ETF’s SPY (NYSE:SPY), iShares Russell 2000 (NYSE:IWM) and QQQ. Their charts are more mixed than they have been with the QQQ showing some signs of weakness on both timeframes while the SPY and IWM are still strong. 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.