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Proactive Spreads, May 3rd, 2018 - COP, IBB

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Another day, another shakeout. This morning it looked as though the market was finally going to give it up and we'd see a swift move to 2500.

And then... buyers showed up. Again. This is the same playbook as two days ago... and last week... and last month...

Yet now I'll go ahead and put it out there-- buyers aren't in control. We've had a series of lower highs and lower lows.

My new key level is 2680. The longer we hold under that level, the higher the odds of a proper rollover. I'm not expecting a crash, but 2500 is plausible.

And if the market manages to clear and hold 2680, then we'll assume a move to 2800 is on deck.

Overall base case still holds... the market is working out a large, multi month, range correction.

Trade #1: COP

This is the healthiest uptrend of all the major oils (XOM, CVX, COP).

A retrace to the gap fill at 5/11/18 would be a great dip buy. This may be one we miss if the oil momentum keeps up.

Trade Setup

Expected Price: 62.50

Sell to Open COP Jun 57.50/55 Put Spread

Tier 1: Enter at 0.32, Exit at 0.07

Tier 2: Enter at 0.47, Exit at 0.22

Tier 3: Enter at 0.62, Exit at 0.37

Trade #2: IBB

IBB has tested the 102 level too many times. I'm looking for aa flush to the June 2017 breakout open.

Trade Setup

Expected Price: 98

Sell to Open IBB Jun 90/85 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

Disclaimer

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