Top Trade Ideas For The Week April 20, 2015: Bonus Idea
Dragonfly Capital | Apr 20, 2015 07:58AM ET
Here is your Bonus Idea with links to the full Top Ten:
Walt Disney, brings to mind images of the castles of Disneyland, Mickey Mouse and friends and fairy princesses. Those are a real part of the company and important as well. But increasingly the stock is becoming dependent on the revenue machine that is ESPN. And it is producing its own highlights reel.
The chart shows a rising basing period from November through February, before it launched higher after its last earnings report. From there it has seen rising trend support and beginning in March, trend resistance. These two have led to a symmetrical triangle that is tightening. This is happening around the 20 day SMA and over the 50 day SMA.
The touch of the lower bound Friday offers a good reward to risk entry for a trade or long term hold. A break out over the triangle would carry a target move of $6.50. The momentum indicators are swinging to the bullish side. The RSI has held in the bullish zone while the MACD has reset lower and is crossing with an upward slope. The company reports next on May 5th. Short interest leading into that report is low at 2.7%.
Walt Disney Company (NYSE:DIS)
Trade Idea 1: Buy the stock now (over 106.5) or on a break over 108, with a stop at 105.
A simple stock purchase.
Trade Idea 2: Buy the April 24 Expiry 106/108 Call Spread (offered at 95 cents late Friday).
A defined risk way to trade this week looking for a move to the large open interest at 108.
Trade Idea 3: Buy the April 24 Expiry 107/108 Call Spread and sell the April 24 Expiry 105 Put (5 cents).
A tighter Call Spread but with a possible entry at 105 on a move lower, adding leverage.
Trade Idea 4: Buy the May 1 Expiry/May 110 Call Calendar (95 cents).
A longer trade looking for large open interest it stall a move higher before 110 in the next 2 weeks.
Trade Idea 5: Buy the May 105/110 Call Spread Risk Reversal selling the May 105 Puts (65 cents).
A wider Call Spread giving more time with downside leverage and a possible entry at 105.
Trade Idea 6: Buy the July 105/115 Call Spread Risk Reversal selling the July 105 Puts (65 cents).
An even wider Call Spread giving more time with downside leverage and a possible entry at 105.
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 next week sees the equity markets remaining positive in the longer run but mixed with a bit of trepidation in the short term.
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Elsewhere look for Gold to continue to hold around 1200 while Crude Oil continues its short term bounce. The US Dollar Index looks to continue to consolidate sideways while US Treasuries are biased higher if they break their consolidation range. The Shanghai Composite is on fire and frothy but who know when it will stop while Emerging Markets consolidate their recent move higher.
Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts suggest that the longer term view remains stronger while in the short term the IWM continues to be the strongest but with some short term trepidation and the SPY and QQQ with a decent possibility to start the week lower. Use this information as you prepare for the coming week and trad’em well.
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