Wild market right now. I’m mentally smoked right now so I won’t have much in terms of in depth analysis.
S&P hit new highs a few days ago, but underneath the surface looked like trash. We had a failed breakout which tends to lead to a move on the other side of the range.
I didn’t expect we’d get it in a single day!
If you’re following some of the other trades we’ve planned, then the scales came hard and fast today. Make sure you’ve got your exits planned so you can take some profits into any bounce.
Is this it? Not a clue. Normally when we have a volatility event like this, we have an a-b-c kind of move where the lows are undercut as the first round of dip buyers get stopped out. Yet we have to consider the composition of the index. If large cap tech finds support, and if industrials/financials don’t get crushed, then this can easily be a one-off event.
Again, brain is fried right now so we’ll get a better feel for how this plays out over the next few days.
Right now, we’ll focus on some relative strength plays and a bounce play in TSLA.
Trade #1: CMI
CMI had a good earnings report and is in a sector exhibiting good relative strength. I want to see an undercut of today’s low to start a new position.
Expected Price: 260.9
Sell to Open CMI 18Jun21 240/230 Put Spread
Tier 1: Enter at 1.25, Exit at 0.24
Tier 2: Enter at 1.75, Exit at 0.1
Tier 3: Enter at 2.25, Exit at 0.08
Stop Out If Close Under 239.89
Trade #2: UPS
Yes, we’re short this, but we can play it both ways. Look for the gap fill around 204 to get started on a position. Odds are this doesn’t round trip but starts to knock out a new range.
Expected Price: 203.86
Sell to Open UPS 18Jun21 195/190 Put Spread
Tier 1: Enter at 1.15, Exit at 0.49
Tier 2: Enter at 1.61, Exit at 0.93
Tier 3: Enter at 2.07, Exit at 1.24
Stop Out If Close Under 194.89
Trade #3: TSLA
TSLA is one where I think we’re close to exhaustion. We’re into some support levels, and while I think we can test 550, it probably won’t come all at once.
I want a 50% retrace of today’s bounce for a new entry. Keep in mind the expiration date, we’re using July instead of June.
Expected Price: 601
Sell to Open TSLA 16Jul21 475/470 Put Spread
Tier 1: Enter at 0.95, Exit at 0.26
Tier 2: Enter at 1.33, Exit at 0.59
Tier 3: Enter at 1.71, Exit at 0.78
Stop Out If Close Under 474.89