Tech stocks just fell lower.
The headlines recycled their favourite doomsday headlines about over-valued AI stocks and an impending selloff.
Which means it’s time for a very specific setup.
This is my #1 trade right now…
Every time tech stocks fall, we have a unique opportunity to make a very simple trade…
You don’t have to be a genius to find these plays.
I’ll give you a freebie today.
But once I show you this price action, you’ll wonder why you didn’t see it sooner.
Fear Hands Us the Entry
When panic sweeps the market, traders tend to sell first and ask questions later.
The strong names and the weak names drop together. Nobody stops to sort the quality from the garbage. Everything hits the exit at once.
That’s where the opportunity lies.
The best companies get yanked down to levels they have no business trading at. And when the panic fades, the buyers come back.
The strongest names rally, at least momentarily.
My job is simple. Find a quality stock that fell to a solid support level. Then wait for it to show signs of a reversal.
I found one earlier this week…
- It’s a household name.
- It just claimed a seat that only 30 companies in America hold.
- And it’s parked right on a level that stopped it cold back in February.
The recent selloff is a reaction to the market as a whole, not a specific issue for this stock.
And I think it can bounce, especially from this level.
The Market Can’t Pick A Direction
Tuesday was rough this week.
The Nasdaq Composite dropped 2.2% while traders dumped anything tied to chips and AI.
The memory names took the worst of it. Micron Technology Inc. (NASDAQ: MU) and SanDisk Corporation (NASDAQ: SNDK) both cratered 13% in a single day.
Where do we go from here?
Look at the Invesco QQQ Trust (NASDAQ: QQQ). The tech-heavy fund still sits in an upper channel, up almost 17% on the year, a stone’s throw from the highs.
Bulls and bears are locked in a standoff, and neither side will commit.
It’s time to tighten my risk and lean on key levels.
Alphabet Inc. (NASDAQ: GOOGL)
This stock just landed a spot in the Dow Jones Industrial Average, replacing Verizon Communications Inc. (NYSE: VZ).
The change goes into effect on June 29. And it forces a wave of index funds to buy shares whether they want to or not.
Fresh, steady demand is about to hit this stock.
GOOGL is still up 11% on the year. It ran to roughly $400 in May, but then pulled back with the rest of the tech sector.
Now it’s sitting at the same highs that capped the stock back in February.
That old ceiling now acts as a floor.
When a former resistance level flips to support, it becomes a line in the sand that we can use to build a position.
- If the stock falls further, we can quickly recognise that sellers are in control and get out.
- If the stock bounces, we know there’s support, and we can ride the momentum for gains.
I’m watching June 24 $352.50 Calls for a fast move, and July 2 $357.50 Calls for a little more room to breathe.
One name, two options to trade it.
React. Don’t Predict.
This selloff handed us a quality stock that’s sitting on a major level while institutions are forced to buy shares…
I’m not calling the bottom of the market. I don’t know whether the chop drags on for another week or the bounce comes tomorrow. That’s not my job.
My job is to focus on a strong stock, mark key levels, and let the trade fall into my lap.
Watch how GOOGL reacts in the coming days. And use this pattern for the next market selloff.
Be good (and be good to others),
Ben Sturgill
*Past performance does not indicate future results. Not typical.
