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There’s a couple reasons why I like this to the long side:
1. Failed breakout. It had a full fledged breakdown and flush into the close last thursday, but was met with a gap up on Friday. This will cause shorts to cover and those that went into cash to chase.
2. 69 is an obvious stop level. That is where we have seen resistance a few times recently, and if you’re short or looking to get in, many will be anchoring against that level.
3. FB earnings are up on deck. Facebook earnings may be used as an excuse to buy internet stocks across the board, and price may move higher in anticipation of that event.
So here’s what the trade setup is:
On a breakout above 69, buy the Aug 70 calls. Scale at 71, and if there’s enough profits, roll into a bull call spread and hold through earnings.
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