The broader markets seemed to be in Party Mode today, particularly the Dow Industrials, again making new highs on positive earnings on a few heavy-weights. The DIA, however, is a Climactic Sell Setup (CSS) so it is hard for us to chase this market with multiple longs without being very particular — which we always are.
Broader market ETFs SPY, QQQ, and IWM all closed neutral. We need more information before we get more aggressive either way.
Complicating this are the mixed short-term market internals: VIX (volatility — or “fear index”) closing higher from major support suggesting higher market volatility and Put-Call Ratio signaling bearish oversold signals (too many bulls buying call options); but the McClellan Oscillator is signaling a short-term bullish oversold signals.
Below is a daily chart of Dave & Buster’s Entertainment, Inc. (PLAY).
Trade: Under $48.40, consider shorting Nov (11/17) $50/55 bear call spread (23 DTE) for current mid-point but for a limit of $.78/share (closed at $.85/share).
Technical Setup: Sell Setup at d20-MA daily and downtrend weekly, relative weakness to markets.
Option Strategy: Bear Call Credit Spread (BCS).
Stop Loss: $50.06.
Below is a daily chart of Alibaba Group Holding Limited (BABA).
Trade: Under $173.26, consider buying Oct (10/27) $180/167.5 bear put spread (3 DTE) for mid-point (closed at $6.23/share).
Technical Setup: Bearish 1-2-3 Continuation breakdown daily, with toppy weekly and CSS monthly.
Option Strategy: Bear Put Debit Spread (BPS).
Stop Loss: $176.22.
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NOTE: Master Trader will show opening and closing prices of all stock and option trades. We do not recommend proper share size for your particular trading style, risk tolerance, or account balance. We urge you to calculate your own share size based on your individualized risk parameters, Trading Plan, and familiarity with the proposed trade strategy and risk.
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