The S&P 500 is holding the 2800 level.
Over the past few newsletters, I’ve talked about the difference in price acceptance at 2800 compared to price rejection late in 2018. When price is accepted, it’s reasonable to assume that markets will continue to auction in the direction of the trend.
That’s basically it. There’s not much further analysis to do here. We’ve got the Fed on Wednesday that could throw a wrench in things, but so far markets are shaping up to stay in a low volatility grind higher.
Any corrections will be rotational in nature. That means intermarket correlations will be low– you can get away with buying the dip and shorting individual stocks based off their own merits instead of needing to obsess over the broad markets.
Trade #1: CSCO
This is the second attempt to play CSCO long. The first was a potential retest of 50, and that didn’t happen. Now I’m interested in playing the retest of the most recent resistance levels.
Expected Price: 52
Sell to Open CSCO May 49/47 Put Spread
Tier 1: Enter at 0.35, Exit at 0.05
Tier 2: Enter at 0.45, Exit at 0.15
Tier 3: Enter at 0.55, Exit at 0.25
Trade #2: AAPL
AAPL is starting to get short term overbought and is going to attempt to come into levels that should offer solid resistance. I like fading this stock at the gap fill from Nov 16th.
Expected Price: 193.50
Sell to Open AAPL May 200/205 CallSpread
Tier 1: Enter at 0.95, Exit at 0.45
Tier 2: Enter at 1.25, Exit at 0.75
Tier 3: Enter at 1.55, Exit at 1.05
Trade #3: FB
This is the second attempt to play it long, and we need to shift option strikes to get a better fill. That line on my chart has been there for a full month and we’re finally getting the test of the half gap fill from earnings.
Expected Price: 158.24
Sell to Open FB May 140/135 Put Spread
Tier 1: Enter at 0.75, Exit at 0.25
Tier 2: Enter at 1.05, Exit at 0.55
Tier 3: Enter at 1.35, Exit at 0.85