Trade Ideas for a Triple Top Stock

09/25/2012 9:00 am EST

Focus: STOCKS

Greg Harmon shares three appropriate strategies for trading solid bullishness in this well-known stock.

Deere (DE) is testing a triple top at 83.25 after moving out of consolidation. It has support for a run higher from the rising and bullish Relative Strength Index (RSI), and a Moving Average Convergence Divergence indicator (MACD) that is positive.

chart
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There is a gap above from 86.63 to 86.88, and resistance above that at 88.66. The three-box reversal Point and Figure chart (PnF) carries a price objective of 102. Support lower is found at 80.55 and 78.30, followed by 76 and 74.

If it does not break this week, there will likely be more trade alternatives. October does not have any strikes over 85 open now, and November began trading yesterday. But there are some good options now as well.

  • Trade Idea 1: Buy the stock on a move over $83.25, with a stop at $81.75.

  • Trade Idea 2: Buy the October $85 calls on a move over $83.25.

  • Trade Idea 3: Sell the October $75 puts on a move over $83.25.

Greg Harmon can be found at Dragonfly Capital.

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