- Posted by Greg Harmon
- on December 27th, 2021
Here is your Bonus Idea with links to the full Top Ten:
Walt Disney, $DIS, made a top in March, almost exactly 1 year after rising off the pandemic low. It pulled back from there, finding support in May. It held there in consolidation for 6 months before a gap down in November. That continued to the 50% retracement of the full move higher and bounced. The initial bounce stalled at the 20 day SMA and fell back. It made a higher low and reversed, ending last week back at the previous high.
As it moves up the Bollinger Bands® are opening higher. The RSI is crossing the midline with the MACD rising towards a move to positive. There is resistance at 154 and 163 then 167 and 169 before a gap to fill to 174. Support lower comes at 150 and 146.50 then 142. Short interest is low at 1.3%. The stock no longer pays a dividend. The company is expected to report earnings next on February 9th.
The January options chain shows the biggest open interest at the 170 and 135 puts with big size at the 150 strike as well. On the call side it builds from 150 to a peak at 170 then slowly tails. The February chain builds from 125 to a peak from 150 to 155 then tails on the put side. on the call side it is biggest at 155 and tails higher. The March chain has biggest open interest at the 150 put and the 160 call strikes.
Walt Disney, Ticker: $DIS
Trade Idea 1: Buy the stock on a move over 154.50 with a stop at 150.
Trade Idea 2: Buy the stock on a move over 154.50 and add a February 150/140 Put Spread ($2.90) while selling the February 165 Calls ($2.45).
Trade Idea 3: Buy the January/February 165 Call Calendar ($1.95) while selling the February 140 Puts ($1.95).
Trade Idea 4: Buy the March 140/155/165 Call Spread Risk Reversal ($1.00).
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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 with only 1 week left in 2021, equity markets showed strength with a rebound from an ugly start.
Elsewhere look for Gold to continue its consolidation while Crude Oil drifts towards the top of a consolidation range. The US Dollar Index continues to consolidate in the uptrend while US Treasuries mark time sideways. The Shanghai Composite looks to continue in consolidation as well while Emerging Markets continue lower.
The Volatility Index looks to remain at normal levels making the path easier for equity markets to the upside. Their charts look strong, especially on the shorter timeframe. On the longer timeframe both the QQQ and SPY continue to show strength in consolidation, while the IWM flounders in the middle of the yearlong consolidation range. Use this information as you prepare for the coming week and trad’em well.
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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.