Biogen Idec (BIIB) has been consolidating after a move off the base at 135-140. A break over the consolidation at 150 carries a Measured Move higher to 162. There is resistance at 153.80 and 156.75 along the way and then free air higher. The Relative Strength Index (RSI) is teasing a move into bullish territory with a Moving Average Convergence Divergence indicator (MACD) that is positive but fading. These are positive but caution a possible reversal. As does the bearish engulfing candle on Friday, confirming the Shooting Star reversal candle lower. A fall back below 147.50 finds support lower at 142 and 139 before 135.
Long Trade Ideas
1. Buy the stock on a move over 150 with a $3 trailing stop.
2. Buy the December 150 Calls (offered at $3.20 late Friday) on the same trigger.
3. Sell the December 140 Puts (50 cents) on the same trigger.
4. Buy the December 150/160 Call Spread Risk Reversal selling the December 140 Puts ($2.10) on the same trigger.
5. Buy the December/January 155 Call Calendar selling the January 140 Put (40 cents) on the same trigger.
Short Trade Ideas
1. Sell the stock short on a break below 147.50 with a stop at 149.
2. Buy the December 145 Puts ($1.75) on the same trigger.
3. Buy the December 145/140 Put Spread ($1.25) on the same trigger.
4. Buy the December 145/140/135 Put Butterfly ($1.05) on the same trigger.
5. Buy the December 145/140 1×2 Ratio Put Spread (75 cents) 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 December sees the markets are biased higher but cautiously so. Gold looks headed lower in its long-term channel while Crude Oil heads higher. The US Dollar Index seems content to move lower while US Treasurys are biased lower but may continue to consolidate.
The Shanghai Composite is marching lower while Emerging Markets stagnate in their consolidation zone. Volatility looks to remain low keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts are starting to show signs of being tired though, so caution is warranted on the long side in the near-term. 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.
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