Some Of The Big Boys Showing Weakness

The XLI is the Industrial Select Sector SPDR ETF.  It’s top holdings include stocks such as Boeing, General Electric, 3M, Honeywell, Caterpillar, Lockheed Martin and FedEx just to name a few.  Take a look at this chart – what do we see?


I see lower highs and lower lows.  Also, the last four times that XLI has broken above the 50 Day Moving Average it has faltered and dropped pretty quickly.  Does that mean it’s going to happen again? Absolutely not – but this is currently a very “trendy” market and is one of those times when the “trend is your friend.”

Based on this we issued a signal today in the Options Volatility Room to buy a put spread going out just about a month, with the June 15th expiration.

Buy June 15th 74 put and Sell June 15th 72 put

The signal was to pay $0.50 for this $2 wide put spread which would give us 3:1 Reward/Risk if filled.