Markets are in full-fledged breakout mode here. Odds are the price action in the next few weeks will resemble what we’ve seen all of 2017– a run followed by a rotational correction and a few shakeouts. I’m staying biased to the longside unless the market loses the breakout low of 2474.
Initial upside resistance is that yellow trendline. Any fast moves above that indicate parabolic action and then we can look at selling some index call spreads or fading names that are parabolic. Intermediate term target is 2550, although that does seem a touch ambitions.
Trade #1: AAPL
AAPL had an event two days ago where the initial optimism was faded. On the fundamental side of things, any new breakthroughs from the company will most likely not be on the iPhone.
I’m anticipating that this short term disappointment will lead to further profit taking and a swift move to previous levels. The earnings gap at 150 is what many will be focused on, but I will be fading the selloff once we break 155, which is the previous support as well as the rising 50 day moving average.
Trade Setup
Expected Price: 154.50
Sell to Open AAPL Nov 140/135 Put Spread
Tier 1: Enter at 0.60, Exit at 0.10
Tier 2: Enter at 0.90, Exit at 0.60
Tier 3: Enter at 1.20, Exit at 0.90
Trade #2: AMGN
Looking for a pullback to breakout pattern. If that doesn’t happen and the stock pushes above 195 without a correction, we’ll look to sell call spreads instead.
Trade Setup
Expected Price: 182.66
Sell To Open AMGN Nov 165/160 Put Spread
Tier 1: Enter at 0.65, Exit at 0.15
Tier 2: Enter at 0.95, Exit at 0.65
Tier 3: Enter at 1.25, Exit at 0.95