Markets are hovering right underneath all time highs and it appears that we’re going to breakout.
Right now, this is a market of stocks, not a stock market. Software companies helped to lead the market out of the hole at the beginning of the year, and we’re now on the backend of earnings season which looked pretty good.
You’re seeing positive reactions by MSFT (now a $1T company) and AAPL… and because the indexes are market-cap weighted, these stocks are making up for the last third of this move.
It’s very possible that the behavior of market participants needs to shift before we can top out. The past few months have been a low volatility grind higher simply because there has been a lack of inventory to sell. Maybe if volumes pick up we’ll see more people get invested in the market and then it finally leads to two-way action.
Or it’s wishful thinking. I’d love more vol and reversion and ACTUAL MARKET DIPS but that is not what the tape is giving us.
Trade #1: MSFT
Looking for a half gap fill.
Expected Price: 127.50
Sell to Open MSFT Jun 120/115 Put Spread
Tier 1: Enter at 0.60, Exit at 0.10
Tier 2: Enter at 0.90, Exit at 0.40
Tier 3: Enter at 1.20, Exit at 0.70
Trade #2: XLNX
One of the darlings of the semiconductor industry took a major hit on earnings. This is after a quarter ago where the stock ran from 90 to 110 in 3 days. I think it’s possible the stock can back and fill here, but odds are it will establish a new trading range.
Expected Price: 120
Sell to Open XLNX Jun 110/105 Put Spread
Tier 1: Enter at 0.84, Exit at 0.34
Tier 2: Enter at 1.14, Exit at 0.64
Tier 3: Enter at 1.44, Exit at 0.94
Trade #3: GOOGL
I expect this post-earnings gap will hold.
Expected Price: 1198.96
Sell to Open GOOGL 1115/1110 Put Spread
Tier 1: Enter at 0.65 Exit at 0.15
Tier 2: Enter at 0.95, Exit at 0.45
Tier 3: Enter at 1.25, Exit at 0.75