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As of today’s close, many of the bearish weekly squeezes we discussed last week have officially fired short. This adds to the list of reasons we’re looking for a continuation lower.

Remember, the rule-of-thumb with a squeeze is once it fires, we’ll typically see 5 to 8+ weeks of momentum. Given these are weekly squeezes, there’s the potential for 5 to 8+ weeks of momentum to the downside. That’s momentum we want to ride.


SPX Weekly Chart


AAPL Weekly Chart


Two examples of big (and important) weekly squeezes firing short are SPX and AAPL, as shown above. We’d like to short both of these names on the next bounce. There are similar setups all over the place, but these are the two we’ve decided to focus on.

Keep in mind that it isn’t just the weekly charts setting up for further downside potential. 

As of this week, we’re also starting to see monthly charts lose structure with moves well under the monthly 21 exponential moving average (EMA). This alone is a huge shift of trend and structure, all in favor of the bears.

As for how we’ll look to short any bounce, July expiration put debit spreads and call credit spreads will be our strategy of choice. As always, we’ll aim to work our desired risk: reward.

Stay tuned for the Sunday video, as we’ll price out a few trades together that we’re looking at.

Stay Focused!