Tech Will Rebound – Window Dressing Is Over

Posted 9:30 AM ET - Yesterday we saw another wave of selling and tech stocks closed on the low of the day. Settlement is T+3 and Q2 window dressing should be over. Before we see a decent bounce the market is likely to test the downside this morning. If the dip is brief and shallow we will grind higher the rest of the day – be ready to jump in. If the market takes longer to find support the bottoming process might take a couple of days. QQQ $138 is a major support level. The news is extremely light and the holiday shortened week ahead will suck the life out of trading. With each passing day the volume will decline. Swing traders who are short out of the money bullish put spreads have taken some heat the last few days. These spreads should have been safely out of harm's way and the worst is over. As long as the stocks stayed above technical support you should still have the positions on. I will add some bullish put spreads in the tech sector today. I will use QQQ $138 as a guide. As long as the QQQ closes above $138 these spreads will be in good shape. When you sell out of the money bullish put spreads you can let the market meander and you can weather pullbacks like we saw this week. Time decay will continue to whittle away at the positions. Day traders should have focused on the short side yesterday when the first hour low was breached. SPY support is $240, $242 and $243. Look for a little weakness early. I plan to trade from the long side and I will be fairly aggressive if the first hour high is breached. I want the see the SPY hold $242 and I want to see it challenge $243. Financials have been fairly strong and we need this sector. Use the XLF as your guide today. Try to sell some out of the money bullish put spreads in tech. Day trade from the long side once support is established. . .

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