This was one of two premium posts for members posted before week starting 5/2/16
As I said last week, it’s time to begin thinking about selling the rip and not just buying. Even though I had that written and had it in mind, it was much harder to do last week given all the disconnects (well isn’t it always harder then it would seem?). Now that we are entering what will most likely be a consolidation through time and price we will look for both opportunities to buy dips (in the stocks that have clean uptrends) and sell the rips (in stocks that are in downtrends or in the penalty box due to earnings).
There are still some big earnings next week, but most of the ones we follow and that have the greatest impact on the overall market are done. SPX held the line of 2053 last week and thus it will be an important area to watch moving forward. Whether or not it is pierced next week or not, I do believe price will fall below that in the coming weeks. However, as of now what we know is there was a reversal candle on Friday that will need to be confirmed next week by price remaining above the 2053.
SPX levels of importance:
Above 2053: 2063 (price closed at 2065 Friday), 2074, 2083, 2093/2095, 2100, 2104, 2111
Below 2063: 2052, 2043, 2039, 2033, 2028, 2020. A close below 2020 would very much hurt the bullish case on an intermediate bases.
Set-ups: After tons of time looking for good set-ups I came up with only four. There will also be concentration next week on the momo stocks highlighted in the open interest if they hit areas that offer good risk to reward trades. I highlight some of the better ones below by reiterating what the set-up is.
These momo’s should not be traded blindly, but taken in context of the overall market, premium prices and if the open interest has changed.
AAPL: Calls at or below 92.5; Puts between 95-97.
AMZN: Calls near 647 or 638 (very dependent on the above statement); Puts over 670, preferably over 675.
FB: Calls at 114.30 or 112.50 (very dependent on above statement); Puts near, but preferably above 120.
GOOGL: Calls below 700 – possibly near 690; Puts near or above 720.
GS: Calls at or below 157. Puts at or above 167.
LNKD: Calls near 120 (very depended on above statement); Calls over 131.