In light of the Iran news on Friday, I foresee this being a tough week in the markets.
Judging by the futures, it looks like stocks are going to gap lower at the open. When we see a gap lower in the market, it usually doesn’t have a sustained drop without recovering first.
Ideally, this is where I would like to go short SWKS. Nobody ever got rich chasing.
Check out what I’m seeing on the hourly chart:
SWKS has been on an absolute tear lately. But last week, we saw a confirmed 13/30 crossover to the downside, and the stock is now trading below the hourly lines. I think we are about to see a sustained move lower in the coming week.
Between profit taking and a weak market, I think that this has legs to move down to the 200 hourly line around $110. That is where I will take my profits.
If SWKS reverses on me and breaks out above $123, I will be forced to stop out of the trade. As long as the crossover remains in tact, and SWKS stays below $123, I would be willing to add to the trade.
The contract I am eyeing is: Jan 17th SWKS put @ $3.70.
