In addition to tonight's new candidate(s), consider these stocks as possible trading ideas and watch list candidates. Some of these stocks may need to see a break past key support or resistance:
RTN, UNH, PPG, LAD
NEW DIRECTIONAL PUT PLAYS
iShares Russell 2000 ETF - IWM - close: 103.39 change: -0.73
Stop Loss: 106.05
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below
Why We Like It:
The stock market looks vulnerable to more profit taking. Equities have produced an impressive run but sometimes the rally just runs out of fuel and stocks correct lower. It doesn't help the bulls that we're approaching the worst two months of the year (August and September). Plus, the small cap Russell 2000 index just tagged a major long-term trend line of resistance (see chart below).
I am suggesting new bearish positions at the opening bell tomorrow. I do expect to see some support and a temporary bounce when the IWM hits the $100 level and its 50-dma but we are going to aim for a drop to the rising 100-dma (currently near $97).
While this looks like a good set up for puts there are always risks. Short interest in the market has hit levels not seen since December 2012. If the FOMC statement or the Q2 GDP estimate on Wednesday or the jobs data on Friday surprise the market it could spark some short covering.
- Suggested Positions -
Buy the Sep $100 PUT (IWM1321u100) current ask $1.56
Long-Term Russell 2000 chart:
Entry on July -- at $---.--
Average Daily Volume = 31 million
Listed on July 29, 2013