XLE sold off hard Friday and again Monday to drop below it’s 50-day SMA. Not a great sign but if it can hold above $88.50 this could be a nice buying opportunity.
A break below and energy might continue to sell off. XLE could quickly drop to find support at 86.58 with 84.44 being the next level of support below.
Watch RIG. If it can get back above $8.00 there is a chance it makes a move towards 8.80 again. If it fails, the trade for upside is off.
Looking at a few other names outside of energy, first up is VMW.
This is a cloud systems software company and its shares have been consolidating just below $170 for a couple of months.
VMW is holding the uptrend and is above its 20-day moving average. I am watching for a break out above $170 with a potential run at $180.
MRVL is a semiconductor name I like and it is breaking out of a wedge and recent downtrend. Closing at 54.59 Monday, I like a run at 57.26 in the next week or two which would be close to a 5% move.
Options are not cheap which means I like considering a spread. Typically buying the at the money calls and selling calls at a strike price near or above resistance.
For MRVL, I like considering the October 13th call options, buying the $55 strike and selling the $58 strike which will cost about $100 per spread contract with a chance to 3x if shares move up towards resistance over the next 10 days.
On the short side, PLUG had a terrible Monday and broke below recent lows. I think it continues lower and could end up below $6.00.
Another short I am considering is SOFI. It rejected at the 20-day SMA and again near the $8.00 level which was prior support. Now I think $8 will be strong resistance and am looking for a drop to 7.50 as we head into earnings season.
I appreciate you listening in and reading A Trader’s Education. Have a great day!
If you enjoy the podcast, be sure to watch live every Sunday on YouTube where I host The Trading Triangle with friends Shaun and Kaye.
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This service is for general informational and educational purposes only and is not intended to constitute legal, tax, accounting or investment advice. These are my opinions and observations only. I am not a financial advisor.
Trade Ideas - Long and Short