7 bright ideas for your watchlist

These 7 bright ideas I consider to be “Trades about to happen”. That is, set ups that are nearly actionable with triggers close by.  For each trade idea, i will give you levels to alarm for entry, potential targets, and other key information to glean from the charts.

More About “Trades about to Happen”

The idea behind “Trades about to Happen” is to keep your trading “pond” fully stocked with ideas ready to trigger so you can focus on executing trades rather than sifting through hundreds of charts to find the set ups. Additionally its important to understand I am a technical trader. I do not consider fundamental factors for these set ups. If you incorporate fundamentals into your criteria, simply apply those considerations to the set ups / stocks of interest. When the fundamentals and technicals align, you should have a nice trade set up.

How to leverage “Trades about to Happen”

Not all the set-ups I provide will be appealing to you. For those you are interested in set alarms at either the level I suggest or at a level where you want to be given a “heads up” about the trade. Once your alarm triggers, you can re-focus on the stock and potential trade. Depending on your current portfolio positions, view of the market,  and other factors you may or may not decide to take the trade.  If an alarm triggers and you don’t take the trade, re-set your alarm at a new level where you’d want to take another look.  In this way a stock won’t run away from you without you being aware.

$AN – Auto Nation  – Daily

Price is breaking from a bull flag consolidation with a measured move target of around $52.  The RSI and PPO indicators look great and are currently supportive  of higher prices.

I dont pretent to know the reasons why, but the group has really perked up.  Take a look at others in the group.  SAH / ABG / PAG / KMX / LAD.  Most have productive looking charts.

Trade Strategy:   Get long against $49 and look for a first move target of $52.  Target the October options chain with either Oct $49 or October 50 Calls.    Traders could opt for a $5 wide spread as well.  An October 50 / 55 call spread would  work.  You gains would be capped at $5 but the spread would knock down the day to day volatility in the position which makes it easier on your psychology.

$FDX – FedEx  Daily

We successfully shorted $FDX on it’s last touch of downtrend resistance at the end of July for a nice win.  Now price finds itself back at resistance. Benefit of the doubt still resides with bears until downtrend resistance is taken out.  The only problem is that earnings are next week.

Trade Strategy:  I typically do not carry positions through earnings so this name is on a watch and wait list.  Earnings will be a catalyst for the next move. On a break above resistance and the declining 200ema, get long with the 200ema as a stop.  If price breaks low, re-assess and look for a good entry location.  A gap down below $150 would be very bearish and signal much lower prices to come.   Set yourself an alarm both on the high side and low side.

$BCO Brinks –  Daily

Courier Brinks has been in a steep decline over the past 6 weeks.  Now price is printing a bear flag.   I think this has farther to fall.  THe options chain in $BCO is thinly traded so it’s interesting to note that 2 “players” recently opened large bearish positions in the name and remain sitting patiently in open interest.  Earnings are between the October expiration and December expiration.

Trading Strategy:  Wait for a trigger, then follow the money.

Bold Approach:  Price is currently $1.50 shy of the 200ema. Watch price closely. If it gets a little closer, get short now against the 200ema.  Select either the Oct 70P or Dec 70P strike depending on if you plan to hold for earnings.

Conservative approach:  Alarm $74 for a break of the bear flag for the trigger.  If triggered, select either the Oct or Dec strike depending on how you plan to handle earnings.

Fancy Pants Option:  Sell a  80 / 82.50 call spread to help finance your downside puts. Use the 200ema as your stop on this leg of the trade.

$LEVI  Levi’s  – Daily

$LEVI, like a lot of recent IPO’s, is broken as it trades well below it’s IPO price.  After a deep look below support at $18.50, price is now revisiting the scene of the crime with a nice kick back rally.  Notice the 50ema converging on key resistance.  To put it succinctly, I don’t think price breaks through resistance.  But regardless of my opinions this is a very objective, low-risk price location for a short.  You short it right here and if it pops $18.50 you’re out for a minimal loss.  If rejected you’re sitting pretty with a great trade location.

Trade Strategy:   Nothing fancy. Look out to October and target the $18 puts that are currently priced at $0.95.  Please double check  $LEVI’s earnings date and flag it. 

$NTGR  NetGear – Daily

NetGear gapped up and filled a prior gap in the process.  Price took out the 200ema at $31.50 which is always a big level. Price has since had a nice consolidation and is now pressing against OH resistance at $35.

Trade ideas:

Set yourself an alarm at $35 for a breakout.  If price breaks out, I’d look to the October options and target the October $35 calls.  Earnings are not a concern with earnings scheduled after October expiration.   Set a stop below $35 but give it a little wiggle room.  $34.50 – $34.75 seems about right.

$ULTA – Ulta Beauty   Daily

$ULTA got slammed a week or so ago after earnings.  Although it dropped $100 in about 15seconds and farther sine, don’t be lulled into thinking the selling is done.  Price is now breaking below i’ts consolidation range and offers a very objective shorting location.

Trading Strategy:  What I love about this set up is that you’ve got a clean shot with a tight stop available.  Get short against $230. With a price close above $230 kill the trade.  I personally like to select at the money strikes, but you can choose what you like.  Maybe a $220 put makes sense.  Just a little out of the money. Considering price is $226, if price cant take out $220 the trade probably isnt working anyways.   Go out in time as far as your wallet will allow; these options will not be cheap.  $190 is support on the weekly and is the first target.

$JPM  JP Morgan – Daily

$JPM is again threatening to break out.  If the surge into big banks is for real, I’d expect $JPM to breakout and hold it.

Trade Strategy   Alarm $116.50 for a breakout.  Target October $115 calls and set a stop just below $116.  As an alternative, you could do a Oct 115 / 125 call spread although you wont get much premium for the $125’s you sell.    Earnings are just a day or two before October expiration.  Be sure to exit before earnings unless you want to roll the dice.

Need More Trade Ideas?

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Notes:

The charts are and levels are provided as well-informed guidelines. That said, please be aware that exogenous events like surprise tariffs or other events can easily move price through support / resistance zones.

Also, set you stops according to your own risk tolerance. The ones I have provided are to be used only as a guide. The most important aspect of your stop is to honor them. Some trades work, some don’t. Honoring your stop will ensure your loss on a failed trade will be minimal.

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