Shares of Target Corp. (TGT) are showing bullish chart formations from every angle, writes Greg Harmon of Dragonfly Capital, who outlines six trade ideas that capitalize using the stock and/or options.
Target Corp. (TGT) broke through short-term resistance on Friday (June 8) and is approaching a full retracement of the move lower through 2011. The stock is building a very long cup-and-handle pattern with a target of $64.
The Relative Strength Index (RSI) is bullish and rising with a Moving Average Convergence Divergence (MACD) indicator that is positive and moving higher again, both supporting further upside.
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There is support lower at $58.20 and $57.10, followed by $56 and $54.80. Resistance higher comes at $63.10 and $65.70, which dates back to 2007.
Finally, the three-box reversal point-and-figure chart has a current price objective of $81. This is a bullish chart no matter how you look at it, and the only reason not to buy last week was all the uncertainty.
Trade Idea 1: Buy the stock on a move over $59.31 with a $1.25 trailing stop
Trade Idea 2: Buy the July 60 calls on a move over $59.31. These were offered at $1.03 recently
Trade Idea 3: Sell the July 55 puts on the same trigger. For the premium seller, these were bid at 39 cents recently
Trade Idea 4: Buy the July 55/60 bull risk reversal. Combining trades 2 and 3, these were offered at 64 cents recently
Trade Idea 5: Buy the October 55/60 bull risk reversal. Giving it more time, these were offered at 78 cents recently
Trade Idea 6: Buy the January 2013 55/60 bull risk reversal. Giving it a lot more time to get to that point and figure target, these were offered at 70 cents recently
By Greg Harmon of Dragonfly Capital
