Here is your Bonus Idea with links to the full Top Ten:
Kansas City Southern, Ticker: KSU
Kansas City Southern (NYSE:KSU) has been rising in a channel since mid February. The past week it pulled back from a move outside of the upper Bollinger Bands® and has consolidated against support at 118.65 in a triangle. The RSI has held up in the bullish zone but the MACD is flirting with a cross down which would be a bearish signal. Notice that the 20 day SMA, the line in the middle of the Bollinger bands, has acted as support many times in this channel,and when it has not, the price has moved to the bottom of the Bollinger bands before reversing. There is resistance higher at 122.40 and 124.20 followed by 126. Support lower comes at 118.65 and 117.20 followed by 114.50 and 107.20 to 108.20. Short interest is low at under 3% and the company reports earnings on October Options Expiration, October 17th, before the open.
Trade Idea 1: Buy the stock on a move over the triangle at 121, with a stop at 118.
Trade Idea 2: Buy the stock now, with a stop at 117.50.
Trade Idea 3: Buy the October 121 Calls (offered at $2.95 late Friday) and trade them like the stock.
Trade Idea 4: Sell the stock short on a move under 117.50 with a stop at 118.50, targeting 113.
Trade Idea 5: Buy the October 117/113 Put Spreads ($1.30) on a move under 117.50.
Trade Idea 6: Buy the October 117/113 1×2 Put Spreads ($65 cents) on a move under 117.50.
Trade Idea 7: Buy the October 3/October 122 Call Calendars ($2.00) and sell the October 3/October 114 Put Calendar (55 cent credit). Looking for a quick pullback and then reverse higher.
Trade Idea 8: Buy the October/November 125 Call Calendars ($1.40) and sell the October/November 115 Put Calendar (70 cent credit). Looking for a played out pullback and then reverse higher.
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, closing out the 3rd Quarter, sees the equity indexes in retrench mode but without major damage yet. Elsewhere look for Gold to bounce around and possible rise in the downtrend while Crude Oil has a similar read with a reversal in the works, maybe. The US Dollar Index remains on fire, and maybe a little too hot in need of a rest while US Treasuries are moving higher. The Shanghai Composite remains strong and looks to go higher while Emerging Markets are biased to the downside. Volatility looks to remain subdued but with a risk higher 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). The indexes themselves are looking better to the downside in the short run, with the IWM near support and the QQQ strong on the longer scale with the SPY likely to see a bit more downside. 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.