Two Longs and a Short

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There's a real divide emerging beneath the surface. A handful of old leaders are quietly starting to look like they are on roll-over alert, while some beaten-down names are showing the first genuine signs of life in months. 

When the market hands us that kind of clean split, we don't have to pick a side. We can take shots at both… and we are.

One name that’s lost momentum and looking increasingly vulnerable is Intel Corporation $INTC.

INTC has formed a classic topping pattern, and price keeps testing the neckline at a short-term support zone around $120. With each bounce becoming weaker than the last, we decided to take a shot in anticipation of a breakdown. 

If every rally keeps getting faded, that tells us sellers are in control. If support gives way, there's plenty of air underneath, and that's exactly what we’re positioned for. 

Our bet is that this stock will retest the pivot lows around $100 in the near future. If that happens, we’ll be paid well on our puts.

I bought the $INTC 7/17 $110 puts for $2.70.