The S&P had another rug pull on Monday-- great way to start the new year!
Overall, things are "fine." The only major warning sign was the fact that Monday's range was more than a 2 standard deviation move-- when there are volatility pivots like that, there is a tendency for the "impulse" low to not be the final low. We could easily crack 3650, get a bunch of investors spooked, and start carving out the lower end of a range-based correction.
Or we could continue with the Q4 2020 playbook and it can be a one-off event as we jam to new highs.
For today, our focus will be planning for a few things.
First, we want to be ready for the dollar to hit a cycle low. It's extended, and any pop should lead to some reversion in commodities. We'll also be looking for rug pulls in two tech/momentum names.
Trade #1: GLD
Expected Price: 180.38
Sell to Open GLD 19Feb21 172/169 Put Spread
Tier 1: Enter at 0.56, Exit at 0.14
Tier 2: Enter at 0.784, Exit at 0.33
Tier 3: Enter at 1.008, Exit at 0.44
Stop Out If Close Under 171.89
Trade #2: ATVI
Looking for a pull to the 20 day moving average, prior resistance, and support from the candlestick wicks from 2 weeks ago.
Expected Price: 88.25
Sell to Open ATVI 19Feb21 80/77.5 Put Spread
Tier 1: Enter at 0.43, Exit at 0.07
Tier 2: Enter at 0.602, Exit at 0.22
Tier 3: Enter at 0.774, Exit at 0.28
Stop Out If Close Under 79.89
Trade #3: PENN
Looking for just a little bit more downside here. I may have missed the short term bottom, but if it goes on one last stop run to attempt a test of prior resistance, I want to be involved.
Expected Price: 78.5
Sell to Open PENN 19Feb21 70/65 Put Spread
Tier 1: Enter at 1.05, Exit at 0.37
Tier 2: Enter at 1.47, Exit at 0.76
Tier 3: Enter at 1.89, Exit at 1.01
Stop Out If Close Under 69.89