Where We're Looking to Buy the Dip

It's Opex day, with plenty of action getting started.

Today is Opex day, where the August options expiration will create price swings in the indices and individual stocks. As of 7:30 ET, the Nasdaq and S&P 500 futures are down about 1%. From Bloomberg:

“Nearly $2 trillion of options are about to expire, forcing holders to roll over existing positions or start new ones. The monthly event includes $975 billion in S&P 500-linked contracts and $430 billion in individual stock derivatives scheduled to expire, according to estimates by Goldman Sachs Group Inc. strategist Rocky Fishman.”

“Traders will try to push the S&P 500 towards 4,300 to make their options contracts worthwhile, according to Brent Kochuba, founder of analytics service SpotGamma. Any failure to reach this threshold would suggest that the latest rally is running out of steam, which could invite sellers…‘Everyone is on the ‘call side’ of the ship,’ Kochuba said.”

It’s Opex, so there will be plenty of seemingly random, choppy swings. If it’s chopping you up, lower your position size and only focus on the best setups. Otherwise, let’s see if this dip develops into something more or is just a small pullback. 

Technical Edge — 

• NYSE Breadth: 53% Upside Volume

• NASDAQ Breadth: 57% Upside Volume 

• VIX: ~$20.75

Game Plan: S&P, Nasdaq

I’m watching for some buy-the-dip setups we have outlined during the week. Including MCK, MSFT and CI. 

That’s alongside the S&P 500. 

Lastly, listen to what the market is telling us!

Bret Kenwell @BretKenwell

Right now the market is showing you which stocks have the "it" factor and which do not That's clear in most sectors but especially in tech - on all levels Look at the difference between $AAPL & $META 1 is in a strong uptrend, bursting through resistance. 1 is is clearly not.

S&P 500 — ES

The 10-day has been active support and comes into play around 4235. That’s our first level of potential support after being rejected by the 200-day moving average. 

So far, the action has been relatively healthy, but it’s Opex day, so let’s keep in mind that volatility can pick up here. 

Below the 10-day, 4210 was a recent area of interest, followed by the 4170s and the rising 21-day moving average. 

S&P 500 — SPY

Same setup in SPY. Watch the 10-day ema here for support. 

As I mentioned the other day, I have a small short position in the SPY as a hedge against my current longs. I will look to cover that into this morning’s opening dip. 

If we hold as support, look for a bounce from the 10-day. If not, $416 to $417 could be in play next week. 

Nasdaq — NQ

The NQ leans a bit more precariously here, balancing on the two-day lows and the 10-day, as it sits on 13,385. 

If it cannot hold, we could see a bit more pressure down to the 13,260 level — which is the 61.8% retracement from this week’s high to last week’s low. 

For short-term traders, a move back over 13,385 could put 13,410 in play (yesterday’s low). Above that and more upside is possible on a short-term bounce. 

TTD

Traders may have enough on their plate with our open trades and potential dip-buying opportunities in the S&P and individual stock trades. 

However, I can’t help but look at TTD. If you’re not wanting to trade high-growth, no worries. Just take a pass on this one. But I’m looking to see how TTD handles the $67 to $68 area, which is the 10-day, 200-day and post-earnings low. 

If it finds its footing and bounces, don’t be afraid to book some quick gains and move to a B/E stop. 

Go-To Watchlist — Individual Stocks