Bearish Signals for SPY & Trading CPNG

We have seen this before for both SPY and QQQ. Will history repeat?

Congrats to those that got in the NVT trade, it continues to climb higher and we have time before the options expire.

It is a great example of finding opportunities in names that might not be on everyone’s radar. The big names are not always the best trades.

CPNG is another name that I like that fits this description. If you have been reading ATE for a while you have seen me trade it before, but not many talk about this ticker.

There is solid liquidity which means you can get in and out of trades relatively easily and the price action allows for big gains in a short amount of time.

A great combination for any trade.

I will outline the details of the CPNG trade, including the options contracts I’m considering, but first lets take a look at the broader markets.

SPY has been powering higher and treating us all to a great first half of the year, so far. The chart has been beautiful for the most part.

But on Thursday a bearish engulfing pattern showed up, and it is eerily similar to the one we saw at the start of April. That was followed by a couple of weeks of selling.

SPY daily candles

Do we see history repeat? If it does, the set up for a long trade would be present itself and I will be ready to jump on it.

If we get a small sell off again, it would potentially retest the prior highs from March and if support shows up it could provide a launching pad for the next leg higher.

QQQ had similar selling on Thursday, but it is worth noting that the Qs remain above their 5-day simple moving average (SMA) which is bullish for now in the very near term.

QQQ daily candles

I am looking for a small pull back to take advantage of and I think SPY might give it to us but QQQ might not be so generous. Big tech could lead the way higher.

Regardless of market direction, there are trades to be made and CPNG is looking like one I will be making early next week.

Here’s what I am considering.