After going straight up off the lows from December, the markets are finally seeing a decent pullback. 2800 is the key level, and if we see that level retaken within the next 5 days it indicates a failed breakdown and a high odds that we will retest the highs.
If that doesn’t happen, then we are probably due for a multi-month trading range, which started back in March. The March pivot low is a reasonable expectation of support, as well as the 2700 level that was the 50% range back from the high volatility range from last quarter. This selloff feels more like a slow bleed compared to what we saw late last year, so unless that changes, I expect reversion and range to be more likely than the straight up/straight down moves we’ve been seeing.
Trade #1: TWTR
The stock had a large move on earnings and is pulling back to support, as well as the rising 50 day moving average. I like playing it here and scaling into any attempts at a gap fill.
Expected Price: 37
Sell to Open TWTR Jul 33/30 Put Spread
Tier 1: Enter at 0.39, Exit at 0.09
Tier 2: Enter at 0.59, Exit at 0.29
Tier 3: Enter at 0.79, Exit at 0.49
Trade #2: NKE
NKE broke under key support on an earnings move. When you see a strong selloff on earnings, there is a tendency to overshoot the lows with a momentum divergence, which is what I’m looking for.
Expected Price: 77
Sell to Open NKE Jul 72.50/70 Put Spread
Tier 1: Enter at 0.37, Exit at 0.12
Tier 2: Enter at 0.52, Exit at 0.27
Tier 3: Enter at 0.67, Exit at 0.42
Trade #3: GS
Looking for the gap fill here.
Expected Price: 180
Sell to Open GS Jul 165/160 Put Spread
Tier 1: Enter at 0.80, Exit at 0.30
Tier 2: Enter at 1.10, Exit at 0.60
Tier 3: Enter at 1.40, Exit at 0.90