The S&P has jammed into the key level I’ve been watching for the past few months. Now we want to see the nature of the pullback.
If we shoot higher without any kind of “cleanse,” then we want to start layering on call spread sales into 2830-2850.
If there is a massive rejection and we somehow manage to lose 2700, then we’ll be looking for very, very deep pullback plays. I don’t expect thatto happen.
My expectation here is that any correction will be shallow, sideways, and rotational. We will establish a small trading range to reset the price action and then move back above 2800. I want to look for strong stocks that are pulling back… because that trade has been a great trade and will continue to be so.
Trade #1: NKE
Looking for a pullback to the rising 20 day moving average (dark blue).
Expected Price: 73
Sell to Open NKE Aug 67.50/65 Put Spread
Tier 1: Enter at 0.38, Exit at 0.18
Tier 2: Enter at 0.53, Exit at 0.23
No Tier 3 – Earnings