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Proactive Spreads, March 15th, 2021 – FB, JPM, BA

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Led by financials and industrials, the S&P jammed to new all time highs, just when it looked like the wheels were going to fall off.

“New all time highs” is never a bearish reading for me, but we can consider how a rotational correction can get started.

If you look at XLI (industrials), XLE (energy), and XLF (financials), they were largely spared from the carnage. I am looking for rotation out of those names, and into those “first pullbacks” I want to get involved.

 

Trade #1: FB

FB is a good play here due to the relative strength against the other mega-cap Nasdaq stocks. While AAPL and MSFT were getting hit 2 weeks ago and making new swing lows, FB made a higher low against the January lows. I think the stock is setup for a breakout here soon, and we can absolutely anticipate breakouts using our system.

Trade Setup

Expected Price: 273.29

Sell to Open FB 16Apr21 255/250 Put Spread

Tier 1: Enter at 1, Exit at 0.32

Tier 2: Enter at 1.4, Exit at 0.68

Tier 3: Enter at 1.8, Exit at 0.9

Stop Out If Close Under 254.89

Trade #2: JPM

JPM has seen a nice run, but it’s extended in the near term. Look for this breakout to fail and for the stock to run towards the other end of the range, that will give us the best risk/reward to take.

Trade Setup

Expected Price: 147.16

Sell to Open JPM 16Apr21 140/135 Put Spread

Tier 1: Enter at 0.67, Exit at 0.07

Tier 2: Enter at 0.938, Exit at 0.11

Tier 3: Enter at 1.206, Exit at 0.13

Stop Out If Close Under 139.89

Trade #3: BA

I think we can call this a breakout.

Boeing is running hot right now, and due for a pull, but I don’t think we will see a full test of the previous support level as institutional interest will be too strong. Instead I’m keying off the price action from Friday, any pull should give us good risk/reward.

Trade Setup

Expected Price: 258

Sell to Open BA 16Apr21 230/225 Put Spread

Tier 1: Enter at 0.86, Exit at 0.15

Tier 2: Enter at 1.204, Exit at 0.44

Tier 3: Enter at 1.548, Exit at 0.57

Stop Out If Close Under 229.89

 

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