6 Trade Ideas That Are Right on Target
06/12/2012 10:35 am EST
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.
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