Noticing some bullish divergence over the last few days in SPY with the RSI indicator. Financials are also leading us higher, so this could be a good place to get long if you were looking for an entry point. However, considering the macro environment, I think caution is warranted.
Another thing I am looking at today is the long term trendline in CAT. You can see that the line come in around $79 when drawn from the 2009 low. In the short term, there is also a bullish RSI divergence. If you wanted a bullish play on the stock you could set up a bull put spread below the long term trend line.
Sell 1 CAT $77.50 July 20th Put @ 2.54
Buy 1 CAT $75 July 20th Put @ 1.93
Net Credit Received = $0.61
Max Gain = $61 per spread
Max Loss = $189
Breakeven Price = $76.89
Return on Risk = 32.28%
The long term trend line also ties in well with a key fibonacci level which gives it even greater weight in my opinion.
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Totally agree with the CAT trade. Also note that earnings appear to be after July opex, so that won’t be an issue. I may end up following you in on this trade.
Yep, I tend not to trade individual stocks, expecially when earnings are due, but I may make an exception in this case.