Top 10 Trade Ideas For The Week Of September 17, 2012

Here is your Bonus Idea with links to the full Top Ten:

Chipotle Mexican Grill (CMG)

Chipotle Mexican Grill (CMG) is stalling as it breaks above the late 2011 consolidation zone, marked by the blue box. It may be building a bull flag or a bearish pennant, it is still too soon to tell. The Relative Strength Index (RSI) is bullish but pulling back from a short stint as technically overbought with a Moving Average Convergence Divergence indicator (MACD) that is positive but starting to fade.

The Price by Volume shows a real lack of previous price history to prevent a run higher, a positive, but the Tweezers Top at 343.90 signals a reversal lower. Short interest over 10% is also bullish and with a 3-box reversal Point and Figure (PnF) if 456 the long term view is higher. But in the shorter run you have to look both ways. Resistance higher is found at 380 and 392 followed by the gap fill to 396.98. The Measured Move out of a flag higher over 344 would take it to 399. Support lower on a break of 330 is found at 319 and 303 before 290.

Bullish Trades:
1. Buy the stock on a move over 344 with a stop at 335.
2. Buy the October 335 Calls (offered at 16.10 late Friday) on the same trigger.
3. Buy the October 340/375 Call Spreads (10.60) on the same trigger.
4. Sell the October 300 Put (3.70) on the same trigger.
5. Buy the October 340/375 Call Spreads selling the October 300 Put (6.90) on the same trigger. Bearish Trades:

1. Sell the stock short on a break of 330.
2. Buy the October 330 Put (12.40) on the same trigger.
3. Buy the October 330/300 Put Spread (8.70) on the same trigger.
4. Buy the October 325/300/290 Broken Put Butterfly (5.65), buying the 325 and 290 Puts and selling 2 of the 300 Puts, on the same trigger.
5. Sell the October 380/400 Call Spread (1.30) on the same trigger

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 looking strong but perhaps a bit extended. Gold and Crude Oil look ready to continue their moves higher with a possibility that Gold consolidates first.

The US Dollar Index and US Treasurys are poised to continue lower, with treasuries having the best chance for a bounce. The Shanghai Composite seems bound by the 50 day SMA while Emerging Markets are biased to the upside but at major resistance.

Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. With the moves higher, each could be forgiven if they consolidated or had a slight pullback first and their charts do have some signs of being extended on the short run. 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