The Big 3: CDNS, NET, WMT

**Marlee Caden** (0:03)
Welcome back to Trading 360 I'm Marlee Caden. It's time for the big three. We've got three stocks, three charts, and three trades for you. Rachel Dashiell will be taking us through the charts today. Here to take us through the trades, Mike Shorr, Director of Trading Education over at Prosper Trading Academy. Great to have you guys on today. Mike, I would love to start with you and just a big picture thought on how we're kicking off this week and the last trading day of August entirely in the red.

**Mike Shorr** (0:29)
Yeah, I mean, not surprising given what happened over in Iran over the weekend. I don't think, I haven't seen a reaction higher or more escalated than it has been. So I think that at least for now in the market is trading it as cautionary, but not like a new step into a new phase of this conflict.

**Marlee Caden** (0:54)
So Mike, as we look at Cadence Design Systems here, which is your first pick in the big three, I'm just looking over their chart. I mean, they've moved higher since they raised their guidance, but not enough to cancel out their year to date losses. They're still down about 3%, but they did have a record backlog. I think it was just north of $8 billion or so here in that latest quarterly report. How are you looking at Cadence right now?

**Mike Shorr** (1:19)
Well, this should be an interesting week because we do have a lot of AI and AI-related earnings coming out with the likes of Dell and Zscaler and things like that. And so we're butting up against resistance here. And so I was looking for a breakout above that, but for right now, it's not there. So I always like to let the market do the heavy lifting for us, and then we'll just come on and go across the finish line. So I'm looking for a breakout here to the upside. And if it doesn't, then it's a no trade, which is nice as a trader.

**Marlee Caden** (1:53)
All right, so you're looking for a breakout. I know I can see here from your trade that you've got a call butterfly here. Walk me through what strikes you're focused on here and how you'd play this one specifically.

**Mike Shorr** (2:04)
Sure, so I'm going out to regular September, so that would be the 18th. I'm going with the 360, 370, 375 broken wing call fly, so an asymmetrical fly.
And the implied volatility is lining up with that 70 strike, and you know, actually if we do get that break up to the outside, it could go a little bit further, so that's why I protected myself with a broken wing fly, so I still get money, you know, I still make money on the, on an extended move up.

**Marlee Caden** (2:38)
All right, so Rachel, I want to bring you in here and take a closer look at Cadence and Mike's broken wing call butterfly that he's looking at. We've got a 362 break even. Below that right now at 3A3877. But looking for a move to the upside, are the technicals indicating that we could be due for that upward move?

**Rachel Dashiell** (2:57)
Yeah, possibly. So Cadence has seen a downturn for the last couple of months. There is quite a bit of resistance at that confluence of the anchored VWAP and the July gap right around 358 So really close to that 360 level. There has been a bullish momentum divergence off of the lows, which could give it a hint to a possible bottoming process in play. And momentum really seems to be strong currently to give it that push towards that level of resistance. But if it starts to wane, traders will look for that prior low to be retested around 310

**Marlee Caden** (3:32)
And so Mike here, as we move to your next one here with Cloudflare and we look at Cloudflare, I mean, a little volatility within, but overall, momentum to the upside for Cloudflare. We're looking at a 50 plus percent gain year to date here. How are you approaching Cloudflare?

**Mike Shorr** (3:50)
Yeah. So I like the sector in general.
And Net Cloudflare is at the top level of that sector. And so again, that's still going to be driven by this AI type of trade. And so I'm going to wait for this. This is what I call an inside bar entry. And so I'm looking for a trade above $3.10.60.
And then we're going to go with a broken wing fly again. This one a little bit different, mostly because of the strikes. But I'm going to be targeting the $3.40 line with that. So the $3.25, $3.40, $3.50 call broken wing fly. Should be able to buy that. If we get above that $3.10.60, should be trading about $2.40. Really nice reward to risk on that.