Today we’re starting with a look at the QQQ – Nasdaq – because that seems to be where the narrative is currently taking hold.
Markets are putting in lower highs and testing last week’s support. There’s also a trendline broken as well as the rising 50 day moving average that is currently being tested. Any further weakness and we could see a baby top form.
Yes, baby top. Super technical term. All that means is that the duration and magnitude of the recent distribution isn’t that great. We haven’t even seen a proper correction since June.
It’s a dip in the markets. Fine. We’ve been preparing for this, identifying high quality pullback setups and anticipating any selling into those levels. That’s the whole philosophy behind being Proactive with your trading.
Trade #1: IBB
We had some good success on this trade back in July, and I’m looking to get involved again on a retest of the lower end of the trading range.
Expected Price: 113.61
Sell to Open IBB Oct 110/105 Put Spread
Tier 1: Enter at 0.85, Exit at 0.35
Tier 2: Enter at 1.15, Exit at 0.65
Tier 3: Enter at 1.45, Exit at 0.95
Trade #2: PYPL
Potential double top. The height of the double top is 6.38, so the measured move takes it down to the low 81’s, which coincides with the rising 200 day moving average and post-earnings price support. This probably won’t get hit but I want to be ready if it does.
Expected Price: 81.16
Sell to Open PYPL Oct 75/72.50 Put Spread
Tier 1: Enter at 0.40, Exit at 0.15
Tier 2: Enter at 0.55, Exit at 0.30
Tier 3: Enter at 0.75, Exit at 0.45