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V: Technical Setups For a Seasonal Stock

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Bulls have given new meaning to an upside bias during monthly expiration. Heading into the third Friday of every month stocks tend to grind higher as trades are unwound and bulls and bears reconcile their positions. This is even more prevalent when futures contracts are being rolled as well.

That's fairly normal and was to be expected this week. What we got was nearly a 2.5% rally for the $SPX over the course of the past two days. Definitely not a market I want to short, at least not right now. And while the rally was a quick one, be careful piling in long here. We've reached extensions and retracements show on today's daily chart that could put an end to the bull run but we'll need to see sell signals before attempting new put positions.

In the meantime it's a stock pickers market and Visa (V) is one that stood yesterday. The stock made new 52-week highs during Tuesday's session and with a daily Squeeze to back us I like the potential for getting to the 1.618% extension at $153.58.
Source: Trade Station
V Daily

For a directional play the December contracts are too close to expiration so we'll be stepping out into January with the 145 calls. We'll start the bidding with a partial position just below yesterday's closing prices at $6.40. If the market does take a hit prior to making our targets I'd be willing to add to the position provided the current ascending channel isn't violated.

United States Natural Gas (UNG) had a nice pop Tuesday and while we're approaching the mean on the daily charts we're looking for a bigger move from this trend. If we break below the December 14 low (a near perfect example of symmetry) we'll have to reevaluate the trade, but until then we continue to hold our long positions looking for at least a move to $20.21.
Source: Trade Station
UNg Daily

Trade: Buy to open V January 145 calls for $6.40, limit GTC.

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John can be followed on Twitter at twitter.com/johnfcarter
Source: thinkorswim
V Chain

 

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