The best way to characterize this market is a “slow bleed.”
There hasn’t really been any capitulation on the indexes, and a handful of mega-cap stocks are keeping the S&P and Nasdaq afloat.
My thesis is still the same– the longer the S&P 500 holds under 2360, the higher the odds that we see a correction.
Yet my “gut feel” here is that the anxiety is not from people owning stock, it’s from the cash on the sidelines. I know I feel it… if the market pops then I’m left behind again, missing out on profits.
On the institutional side, we may see a trade where the markets get jammed back higher due to that anxious cash.
Trade #1: IBM
Very strong gap lower on IBM. Look for a lower low at 158 to sell some spreads.
Expected Price: 158
Sell to Open IBM Jun 150/145 Put Spread
Tier 1: Open at 0.60, Close at 0.10
Tier 2: Open at 0.90, Close at 0.60
Tier 3: Open at 1.20, Close at 0.90
Trade #2: NFLX
NFLX is a touch weak after its earnings event, and has been in the tightest range we’ve seen in a while. I’m looking for the gap at 133 to get filled and act as support, then a reversal into the previous range.
Expected Price: 135
Sell to Open NFLX Jun 125/120 Put Spread
Tier 1: Open at 0.80, Close at 0.30
Tier 2: Open at 1.10, Close at 0.80
Tier 3: Open at 1.40, Close at 1.10