After clearing the trendline breakout, the S&P has settled into a very tight, multi-week trading range between 2700 and 2750.
Buyers are in control. The longer we hold above 2700, the higher the odds that we see continuation back to 2800.
Underneath the surface it’s a mixed bag. Energy stocks are finally getting hit hard, while the large-cap tech momentum players are finally running. See NFLX recently, AMZN is about to run, and BABA looks good for a squeeze higher.
A rotational correction in a tight range… that’s something we haven’t seen in a while. Over the past few months the volatility has led to individual stocks running on the same conveyor belt… large intermarket correlations.
To see that subside… that’s a bullish reading.
In terms of new trades, I’m not seeing setups on individual stocks that haven’t already been covered. Instead, we’ll focus on the small cap index.
Trade #1: RUT
The Russell 2000 index has already cleared to new highs, and is just having a small retest of previous resistance levels. I like scaling into spreads here and any dips.
Expected Price: 1627
Sell to Open RUT Jul 1575/1570 Put Spread
Tier 1: Enter at 0.90, Exit at 0.40
Tier 2: Enter at 1.20, Exit at 0.70
Tier 3: Enter at 1.50, Exit at 1.00