Signs of divergence: Get exposed to earnings disappointment.CCL SHOWING DIVERGENT SIGNS:
- Long and short term negative trends, while the medium term is still up trending;
- Golden cross in mid November suggesting upside on the uptrend;
- Multiple rejections at/above 53 suggesting more downside;
- Down trending MACD and RSI;
- Mildly positive consensus (closer to a HOLD);
- Some 10% upside on the consensus target price;
- Downgrade this day by a broker ahead of earnings tomorrow.
GET MEASURED-RISK EXPOSURE TO EARNINGS DISAPPOINTMENT:
- Buy Jan '17 $50/$49 put at $1.35/$0.95 (indicative);
- Sell Jan '17 $44 put at $0.20 (indicative) to mitigate the cost of the strategy.
COMPELLING REWARD/RISK
Targets down: 46 / 44 / 40
Max loss (assuming 49/44 put spread): $0.75/share
