Those that believe psychology plays a role in how markets trader are going to get a good taste near-term as consumer "psychology" as depicted by today's release of the University of Michigan consumer sentiment showed optimism about the state of the economy and consumer confidence fell in June.
With "psychology" in play, the NASDAQ-100 Index (NDX.X) 1,204 -2.04 is going to see some past "psychological" resistance of 1,200 no have to serve support as the NASDAQ-100 found a session low of 1,202.19 come very close to the 1,200 level.
While I'm not monitoring all 100 of the NASDAQ-100 Index component's point and figure charts, one stock I had on my list of short/put candidates for a move lower has been Maxim Integrated Products (NASDAQ:MXIM) $34.53 -3.41% should the stock trade $35 and generate a triple-bottom sell signal. Today's consumer sentiment data seems to have provided just enough selling for this stock to now show supply beginning to outstrip demand, and with both the NASDAQ-100 Bullish % ($BPNDX) from www.stockcharts.com and Semiconductor Bullish % (BPSEMI) from Dorsey/Wright and Associates well above the 70% level, today's trade at $35 is hint that MXIM may have been one of the boats rising with the tide, that is first to sink at higher risk levels.
Maxim Integrated (MXIM) - $1 box size
I don't remember setting a downside alert on MXIM at $35, but at some point I did, and I'm sure it was because a trade at $35 needed to be monitored as the stock of MXIM would generate a triple-bottom sell signal at a higher level of bullish % or BULLISH risk level and be a signal that MXIM may well be on the "out list" of bulls that begin taking profits from the lows.
What I like about MXIM as a short/put play is the stock has WEAK relative strength versus the NASDAQ-100 and SOX.X, and we can see that as it relates to the December highs (red C). The recent pattern of lower highs since May (red 5) also hints that bulls have perhaps lacked enthusiasm for the stock.
I want to honor the bullish support trend at this point, by only establishing 1/2 bearish position, as a rebound back to $38 would be the "ideal" bearish entry point with stop then close at $41. The "reason" for at least 1/2 bearish, is if today's Michigan sentiment data is determined as SO NEGATIVE that the stock continues to decline due to lack of favor exhibited in the chart to begin with. If the NASDAQ-100 Bullish % ($BPNDX) is going to fall back to 50% from recent 91% levels and last night's 89% levels, then MXIM is obviously one of the early stocks to give the reversing sell signal for the bullish %, and can hint this is a more out of favor stock in the NASDAQ-100, and Semiconductor sector. It is thought that weakness leads weakness, and MXIM looks to fit the bill.
Right now, the only thing I don't like about an option trade is there are only Aug and Jan expiration and I was looking for something around September/October. Still.... for those that don't mind paying a little extra for time, I like the January $35 puts (KKJMG) $5.40 for 1/2 bearish.