The market�s resilience has been quite impressive as of late, with the last four trading sessions starting with an early morning plunge and following up with a strong late-day rally. This perpetual bid beneath the market continues to reward dip-buyers.
As market conditions improve and return to trending conditions, it should become much easier to identify strong trending stocks that are forming low-risk, high-reward price patterns.
One such stock approaching an interesting crossroads is Nasdaq OMX Group (NASDAQ:NDAQ). The $26 price level has provided significant overhead resistance for the past two months. Once the stock is finally able to absorb all of the supply in this area, higher prices should be in the offing.
The cheaper share price of NDAQ opens up the possibility of a simple stock trade. At $26 a pop, you won�t have to tie up an exorbitant amount of capital to buy shares. And if you�re looking for an option play, you might consider following one of these two trade ideas on a confirmed break of $26. You can:
1. Buy to open the NDAQ Jan 25 Call option (which is currently trading at $2.30), or
2. Enter the NDAQ January 25-28 call spread by �buying to open� the Jan 25 Call and simultaneously �selling to open� the Jan 28 Call (which is trading at 85 cents). At these prices, the spread would cost $1.45, or $2.30 – $0.85.
The bid-ask spread isn�t too terribly wide in NDAQ options, but the trading volume in the January series has been somewhat spotty in recent days, so limit orders are a must here.
Source: MachTrader
At the time of this writing, Tyler Craig had no positions on NDAQ.
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