As we predicted because of the bullish sentiment interpretation of the equity put-call ratio becoming too bearish (i.e., the “wrong-way” option traders were fully invested in predicting a market mini-crash), the markets and many stocks put in bullish reversals yesterday.
Although the Indices are not clean patterns, we found numerous compelling setups on individual stocks. We gave many stock and option recommendations in our Advisory Letter, but the option traders were all with expirations longer than 10 days because those stocks only had monthly expirations.
Below is a new recommendation with 10 DTE. Today’s gap up in SPY, DIA, and IWM are making the hourly charts extended and at Major Resistance, but we are confident we will find new option trade ideas with 10 and 3 DTE on retracements. The QQQ, showed relative strength yesterday, are gapping over Major Resistance on the hourly chart and look great, so our QQQ new put spread trade is awesome.
7/3: FDX – Consider shorting Jul (7/13) $222.5/212.5 bull put credit spread (10 DTE) for mid-point but a limit of $.87/share (closed at $.97/share). Climactic Buy Setup and Bullish engulfing bar (also a higher low then prior Bottoming Tail) with Transports ETF on Major Support. Stop Loss: $222.38.
The GOOGL trade yesterday with 4 DTE triggered, but was insufficient credit; thus, the adjustment below with next week’s expiration:
7/3: GOOGL – Consider shorting the Jul (7/13) $1100/1090 bull put credit spread (10 DTE) for mid-point but a limit of $1.10/share (closed at $1.20/share). Bullish retest of prior low of a Master Trader Buy Setup and bullish reversal bar on r50-MA and Minor Support daily. Stop Loss: $1105.88.
Good trading, and Happy Fourth of July from Master Trader!
