Last week’s range in the broader markets was the narrowest for the year. The last three trading days of last week barely moved. The closing change over those three days in the S&P 500 was only a point and ½ and the Dow moved just over eight points.
Contractions in range and volatility rarely stay this way for long, so the expectation is that an expansion is coming in the near future.
The question that we all want to know is, in what direction will this expansion in range be in? I will address that in a systematic way as much I can in the video.
Earnings season is nearing its end; however, this week is relatively heavy in the Retail sector.
Some notables are: AutoZone (AZO), Cracker Barrel (CBRL), Urban Outfitters (URBN), Dollar Tree (DLTR), Gap (GPS), Ralph Lauren (RL), Sears (SHLD), Target (TGT), Tiffany (TIF), Best Buy (BBY), Ross Stores (ROST), and Foot Locker (FL).
In the Technology sector, there are a few notables: Intuit (INTU), Autodesk (ADSK), Hewlett Packard (HPE) and Netapp (NTAP).
The Home Construction sector is one of the worst performing sectors this year. After plunging lower on Tuesday and below a multiple month base, it rallied back to the bottom of that base during the rest of the week.
By the end of the week, a Bottoming Tail had formed on the sector ETF symbol ITB. We will be watching to see if the ETF can move back up to the top of the base. If it does, we are going to be interested in this sector ETF as a buy.
Within this sector, two companies report earnings this week. They are Toll Brothers (TOL) and Lowe’s Companies (LOW). We’ll be watching how the ETF reacts.
The Energy sector was among the best performing last week; however, I think it’s near a short-term top. There are several Energy sector ETF’s. While they typically move in the same direction together, they don’t all perform exactly the same.
The worst performer energy ETF last week was the symbol XLE. It may be in the process of forming a Breakout Bar Failure (-BBF).
We will see early in the week if it plays out.
Market Overview Video
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The Green Room
As I believe you know, we opened the Green Room about two weeks ago.
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NEW STOCK TRADING IDEAS
Below is a daily chart of Abercrombie & Fitch Co. (ANF).
Trade: Over $27.49, consider buying stock.
Technical Setup: Two Doji Bars in the upper part of +WRB Breakout from W-Bottom consolidation at r50-MA daily, bullish weekly.
Stop Loss: $26.02. Earnings 6/1.
Below is a daily chart of Shutterfly, Inc. (SFLY).
Please read below.
NEW OPTION TRADING IDEAS
Below is a daily chart of Shutterfly, Inc. (SFLY).
Trade: Over $95.88, consider shorting Jun (6/15) $90/85 bull put credit spread (26 DTE) for a limit of $.65/share (closed at $.70/share). Note: This stock tends to have wider spreads between the bid and ask.
As a stock Trading Idea
This price pattern is also suitable for a swing long above $95.88 and a stop-loss below $91.00. Share-size accordingly.
Technical Setup: Breakout from bullish consolidation after Pro Gap +WRB breakout daily, bullish weekly.
Option Strategy: Bull Put Credit Spread (BPCS).
Stop Loss: $91.54.
Below is a monthly chart of SunPower Corporation (SPWR).
Trade: Over $9.49 or the 30-Min. high, consider shorting Jun (6/15) $9/7 bull put credit spread (26 DTE) for a limit of $.38/share (closed at $.42/share).
Technical Setup: Huge bullish W-Bottom monthly, bullish weekly, and sector (TAN) bullish.
Option Strategy: Bull Put Credit Spread (BPCS).
Stop Loss: $7.99.
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Greg Capra
Managing Director of Master Trader
Trading the Pristine Method — Origin and End
Dan Gibby
Chief Options Strategist
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NOTE: Master Trader will show opening and closing prices of all stock and options trades. We recommend that all traders and investors use proper share sizing for positions and money management. However, we cannot recommend what that is for your particular trading style, risk tolerance, or account balance.
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