Just looking for a reason…
Markets took a hit today on some (potential) tax hike news. The news itself isn’t important, just the reaction to it– markets were extended already and just needed a catalyst.
By the way, here’s how this is going to go down. The administration floats a HUGE cap gains number, double the current rate to get everyone spooked. Then when they come forward and push out a hike much lower than that number, people will be relieved instead of outraged. This is negotiation 101.
We don’t know what narrative will come along that the investor zeitgeist will attach to price action. And this one feels like it won’t stick, but we could see enough technical damage done to bring in some stop loss runs and a decent pullback in stocks.
The true news I’m watching has to do with mega-cap tech earnings. Names like GOOGL and FB have already seen monster runs into the earnings event, so if we see a sell-the-news reaction then that can push markets a little more. We’ll see when they all report next week.
Today we’re focused on names that have first-pull potential, along with an EPS LL setup in NFLX.
Trade #1: ADBE
ADBE cleared some key resistance levels, and will most likely chop around as it consolidates under all time highs. This stock is *very* whippy so if I want to play a pullback, I need to focus on levels a little lower than what I would normally start with. We’ve got the 20 day moving average with a few gap fills that should provide some support if we come into it.
Trade Setup
Expected Price: 492
Sell to Open ADBE 18Jun21 450/445 Put Spread
Tier 1: Enter at 0.9, Exit at 0.2
Tier 2: Enter at 1.26, Exit at 0.51
Tier 3: Enter at 1.62, Exit at 0.67
Stop Out If Close Under 449.89
Trade #2: GS
Still looking for a retest of the previous highs, which now lines up with a measured move expectation. If this thing runs to 380 without me, fine, I’ll look for a pullback after that, yet I think GS and banks are close to an inflection where a rug pull into the low 300s will be a tradeable level.
I understand that this planned entry is a good ways away from the current price of the stock, but I don’t want to get runover if the market decides to take a dump.
Trade Setup
Expected Price: 309.42
Sell to Open GS 18Jun21 285/280 Put Spread
Tier 1: Enter at 0.9, Exit at 0.2
Tier 2: Enter at 1.26, Exit at 0.51
Tier 3: Enter at 1.62, Exit at 0.67
Stop Out If Close Under 284.89
Trade #3: NFLX
NFLX caught some heat on earnings… I don’t think these levels will hold, and we’ll see some selling if it clears 500. Into the lower end of the range I want to pick up some long exposure.
Trade Setup
Expected Price: 486.38
Sell to Open NFLX 18Jun21 450/445 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 449.89