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Proactive Spreads, June 18th 2019 – HD, FB

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Before today’s breakout, the past 5 days have been a real snoozer. Boring markets tend to resolve bullishly, and that’s what we’re seeing today.

This price action makes sense. After a quick push to 2730, the markets jammed back above 2800 and retested the upper end of the range. We saw a few failed pushes higher, which led to a move under the range.

This is the nuanced part of it… there wasn’t any downside followthrough. The market just hovered around the 2900 level with a sharp decrease in price movement. That kind of price action leads to upside.

And that’s what we’re seeing today. The trade setups we’re looking at are biased to the downside, yet we need to respect that the current structure of the market is pretty bullish.

A loss of 2900 and actual downside followthrough would change that trade thesis.

Trade #1: HD

HD is overbought headed into resistance. Expect a pullback or sideways action.

Trade Setup

Expected Price: 207.89

Sell to Open HD Jul 215/220 Bear Call Spread

Tier 1: Enter at 1.03, Exit at 0.53

Tier 2: Enter at 1.33, Exit at 0.83

Tier 3: Enter at 1.63, Exit at 0.93

Stop loss on 30 minute close above 215.30

Trade #2: FB

Similar structure as HD– it’s overbought and As it heads into the April pivot highs I like scaling in to a short setup.

Trade Setup

Expected Price: 195

Sell to Open FB Jul 210/215 Call Spread

Tier 1: Enter at 0.60, Exit at 0.10

Tier 2: Enter at 0.90, Exit at 0.40

Tier 3: Enter at 1.20, Exit at 0.70

Disclaimer

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