Top Trade Ideas For The Week November 30, 2015: MKC
Dragonfly Capital | Nov 30, 2015 07:49AM ET
Here is your Bonus Idea with links to the full Top Ten:
McCormick (N:MKC), is looking to spice things up into the holidays. The spice company has been in a rising trend since October 2014 as shown by its ability to stay above the 200 day SMA and continue higher. 4 times over this period the 200 day SMA has acted as support.
Heading into next week the stock is pressing against resistance at 86 for the third time. The first two led to pullbacks. The price action is building an expanding wedge and a break to the upside would target a move to 94.40. There is a Deep Crab harmonic as well that has a Potential Reversal Zone (PRZ) at 91.15 above.
The momentum indicators also point higher. The RSI is bullish and rising and the MACD is crossed up and rising. There is resistance here at 86 and then free air above. Support lower comes at 85.20 and 83.55 followed by 82.30 and 81.60. Short interest is elevated at 6.2%.
Checking the options open interest sees the biggest size in December at 85 on the Call side and then 90. But on the Put side there is comparable open interest at the 75 strike. It is notable that most open interest is below the current price. In January there is little open interest, and it is still building in March, post the January 28th expected earnings report, but also mainly lower than the current price.
The chart points up and the options point down.
McCormick & Company Incorporated (N:MKC)
Trade Idea 1: Buy the stock on a move over 86.10 with a stop at 85.
Trade Idea 2: Buy the stock over 86.10 with a March 80/85/90 Put Spread Collar (collar at 65 cents).
Trade Idea 3: Buy the December 85 Calls (offered at $2.05 late Friday).
Trade Idea 4: Buy the January 85/90 Call Spread ($2.25).
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 December sees the equity markets looking solid and maybe with new leadership.
Elsewhere look for Gold to continue lower while Crude Oil builds a bear flag in its longer downtrend. The US Dollar Index is breaking out to multi-year highs while US Treasuries consolidate with a short term bias higher. The Shanghai Composite broke consolidation to the downside and may be resuming the downtrend, while Emerging Markets are moving lower after failing at resistance.
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Volatility looks to remain subdued and possibly fall keeping the bias higher for the equity index ETF’s N:SPY, N:IWM and O:QQQ. The SPY and QQQ paused this week and the IWM has taken over leadership in the short term. All look positive on the intermediate term chart. Use this information as you prepare for the coming week and trad’em well.
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