CME Group: 5 Trade Setups
Dragonfly Capital | Apr 21, 2014 08:04AM ET
CME Group Inc. (NASDAQ:CME)
CME broke below support April 7th and has consolidated since. On a closer review that consolidation has traced a bearish Shark harmonic, with a Potential Reversal Zone (PRZ) at 73.81 above. There is resistance at 69.60 and 70.35 followed by 72.20 and 74.15. Support lower comes at 67.55 and 66.75. The RSI is back to rising and the MACD is about to cross up, both supporting the price action higher.
- Trade Idea 1: Buy the stock on a move over 69.60 with a stop at 68.50.
- Trade Idea 2: Buy the May 9 Expiry 69.50 Calls (offered at $1.60 late Friday) on the same trigger.
- Trade Idea 3: Buy the May 9 69.50/May 2 71 Call Diagonal ($1.00, buy May 9 and sell May 2) on the same trigger.
- Trade Idea 4: Buy the May 9 69.50/May 2 71 Call Diagonal and sell an additional May 9 72.5 Call (60 cents) on the same trigger.
- Trade Idea 5: Buy the May 9 69.50/May 2 71 Call Diagonal and sell an additional May 9 72.5 Call and a May 2 67 Put (10 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 Friday which, heading into the May options cycle sees the equity markets as mixed. Elsewhere look for Gold to continue lower while Crude Oil continues to move up. The US Dollar Index seems ready to move sideways or pullback while US Treasuries are biased higher. The Shanghai Composite and Emerging Markets are both in consolidation mode with the Chinese market looking better lower and Emerging Markets biased to the upside. Volatility looks to remain low 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) and potentially signaling for a new all-time high to come in the S&P 500. The equity Index ETF’s themselves paint a mixed picture with all rising on the short term, but the SPY the strongest and back at the consolidation zone, while the IWM and QQQ still have a lot of work to do to remove the intermediate term downward bias. 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.
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