Summary of Technicals: • Broader market in potential early stage of topping. • Honeywell, appear to have completed wave 5 with minor 5 waves. • It has been weaker that the Nasdaq since April 2014 even though it continued higher till Feb 2014 putting in very bearish high wick candle suggesting penitential reversal. • RSI divergence with price on Monthly chart as can be seen below. • Anticipated drop to 90 would give us 100% return. If it drops to 70 - 80 we could expect 4 - 6 times our initial risk.
Warning: This is my interpretation of price action using TA approach that I consider helps me most but could be completely wrong. Therefore as always, do your own analysis for your trade and manage the risk management. You should follow this on Paper Trading Account till you feel confident to apply the skill to live account.
Honeywell appear to have topped and if potentially forming H&S pattern with price sitting on the neckline. So the original trade suggested if you have entered should be kept but do not recommend addition to this as the Bib/Offer spread is too wide.
DanV
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UPDATE 24th July 2016: Honeywell
Daily – daily now appears to have completed the final wave in the form of a rising wedge (ending diagonal) and on the recent earnings release, it opened with gap down.
This could be the start of bearish cycle anticipated.
Monthly -
DanV
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Initially published on 2nd March 2016
Suggested trade Potential short
with 65 Jan 2017 PUT at $1.0 or better.
Trade is still valid and As at 20th June 2016
Potential short with 65 Jan 2017 PUT at $0.47 - $0.61
Under $0.5 could be considered for adding to or new position.
If price drop to $90 = Option could be priced $2.50+
Alternately, a suggested Spread Trade (as at 21/06/2016)
Buy Jan 2017 PUT with Strike $100 & simultaneously
Sell Jan 2017 PUT with Strike $90 for Cost of = $0.95 - $1.17
If price rises to $120 we could get filled around $0.90
If price HON drops to $90 potential trade = $5+
DanV
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UPDATE - 7th May 2016: On daily chart we could have potential double top in the region of $116.50. Overall nothing has changed for this trade and suggested options is now quoted as $0.62 - $0.75. So getting filled around $0.60 looks possible on any retracement bounce.
DanV
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UPDATE 4th April 2016: Nothing new to add to This chart except to say that the Earnings announcement is due on 14th April and there is good possibility of having the suggested options pending order to fill at $0.6, presently showing $0.65 - $0.76
DanV
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Update - 23rd April 2016:
This is approaching our potential topping zone in the region of 115. The suggested Options are now priced at 0.70. The Earnings announcement due on 14th April. It could continue grinding higher and we might now be able to but the suggestion PUT options for around 0.60 - 0.50. Here is the chart
DanV
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Update 10th March 2016: Honeywell is still holding up and grinding higher. So not to rush in. At the time of publishing the chart the Options was priced at $1. However, as we continue higher and possibly spike up on earnings announcement due in just over a month, we could actually purchase these at lower price. So in anticipation we could have limit order at 0.75 - 0.6 and monitor. Here is an updated chart as it stands at present