My overall opinion on this market is bearish. Short term. It’s parabolic and we’re at price levels where I’m fairly confident that a correction is due. Not “end of the world” just statistically normal. Long term this is still a massive bull run and there isn’t enough evidence to justify that “the” top is just around the corner.
For reference, a 3% correction off the highs is 2785. Just 3%. Traders will think it’s the end of the world when in fact it’s just run of the mill reversion.
The rotation game is still in play so it’s best to look for risk reward on individual dips.
Trade #1: CAT
The “global growth” theme helped the stock run over 20% in about a month, and their earnings numbers were massive. But they were priced in. We’re now seeing some giveback post earnings, which is fine. Anything into 160 is going to be a good trade.
Expected Price: 160
Sell to Open CAT Mar 145/140 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 1.20, Exit at 0.70
Trade #2: AAPL
AAPL is the lone stock that did not run this month. Whispers of bad sales numbers and other things are probably getting priced in ahead of earnings. I like getting long small on this dip and wider scaling in through earnings.
Expected Price: 168.31
Sell to Open AAPL Mar 150/145 Put Spread
Tier 1: Enter at 0.55, Exit at 0.05
Tier 2: Enter at 0.95, Exit at 0.40
No Tier 3 Until After Earnings