Here is your Bonus Idea with links to the full Top Ten:
CF Industries, CF, makes and distributes fertilizer. Exciting right? Not really. But the company has been around for almost 70 years and is thriving. In fact the entire fertilizer space has started to look attractive for investment.
The chart of the stock price shows a move higher out of broad consolidation to start the year and then a shallow pullback. This was a Cup, and the Handle of the pattern seems to be building in a broad wedge expansion.
The Measured Move to the upside on a break out targets 72.50. And the RSI is bullish and the MACD about to cross up, supporting a move higher. The Bollinger Bands® are also expanding. But the expanding wedge is often a topping pattern. So it needs to be watched for a breakdown. The target there would be a retracement to the prior low at 56.
This gives two trade opportunities, one to the upside and one to the downside. The options chain shows some size this week at the 65 and 66 strikes above. There is also large size at 64.50 in July and then in august it moves both ways, with size at 61 and 68 to 71 on the call side, but size at 57 and 60 on the put side.
Short interest is low under 1%, and the company is expected to report earnings next August 6th.
CF Industries, Ticker: NYSE:CF
Trade Idea 1: Buy the stock on a move over 66 with a stop at 64.
A straight stock trade.
Trade Idea 2: Buy the August 66 Calls (offered at $1.67 late Friday).
A defined risk method for participating to the upside.
Trade Idea 3: Buy the August 66/72 Call Spreads ($1.40) and sell the August 60 Puts (86 cents).
Giving more time but also capping the trade return in exchange for lower cost.
Trade Idea 4: Sell the stock short on a move under 62.25 with a stop at 63.75.
A downside stock trade.
Trade Idea 5: Buy the July 62.5 Puts (58 cents) on the same trigger.
Using defined risk to the downside.
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 heat of Summer sees the Equity markets looking vulnerable on the short time frame and just sideways on the longer timeframe.
Elsewhere look for Gold to continue the broad consolidation with a downward bias while Crude Oil looks to move lower. The US Dollar Index looks to continue to consolidate in a tightening range sideways while US Treasuries are consolidating but biased lower. The Shanghai Composite is crashing and shows no sign of letting up yet while Emerging Markets may be bouncing in their downtrend. Volatility looks to remain low but above recent levels and with a risk of more upside easing the tailwind it has given the equity indexes.
The ETF’s ARCA:SPY, ARCA:IWM and NASDAQ:QQQ, themselves all appear vulnerable on the daily timeframe with the QQQ the strongest looking flat. On the longer timeframe the QQQ is also looking the strongest but has pulled back to trend support with the IWM looking weaker. Perhaps some rotation out of small caps and into technology and larger caps to come. 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.