This is about as good of a pullback as you can get these days.
The S&P 500 has broken its 3-month uptrend, which leads me to conclude that more sideways, reverting action is up on deck for the next few weeks. This lines up with the current narrative of what’s driving prices– US legislation. And the way *that* has gone this year, expect the newsflow to alter between amazing headlines of a tax deal and despair as the plan falls through.
Major support sits at 2540, which is prior support and the rising 50 day moving average.
Short term resistance is 2580, which is the high from Nov 14 and the gap fill level.
Trade #1: NFLX
After its earnings event, NFLX has undergone a time-based correction. There has been some news about Disney pulling their content, but that has been news for a while now… probably priced in already.
When you see a stock have a low-volatiltiy consolidation near its all time highs, the odds of trend continuation are very high.
Trade Setup
Expected Price: 190.75
Sell to Open NFLX Jan 165/160 Put Spread
Tier 1: Enter at 0.60, Exit at 0.10
Tier 2: Enter at 0.90, Exit at 0.40
Tier 3: Enter at 1.30, Exit at 0.80
Trade #2: TXN
Semiconductors were the strongest secot for the past few months. In this case, TXN ran 20% before finally stalling out. If the stock sees a pullback into pivot support, the 50 day moving average will have caught up and we can start selling some put spreads.
Trade Setup
Expected Price: 95
Sell to Open TXN Jan 87.5/85 Put Spread
Tier 1: Enter at 0.35, Exit at 0.10
Tier 2: Enter at 0.50, Exit at 0.25
Tier 3: Enter at 0.65, Exit at 0.40