The Big 3: VRT, CME, SMCI

Marlee Caden (0:02)

Welcome back to Trading 360 I'm Marlee Caden. It's time for the Big Three. We've got three stops, three charts, and three trades for you. Kevin Green will be taking us through the charts. Here to take us through the trades is Scott Bauer, the CEO of Prosper Trading Academy. Great to have you both with us. Happy Monday to you, Scott. Let's start with a big picture. Market thought seems as if we've got some dip buying in the AI trade after last week. How are you looking at what we're getting to kick off a new trading week here?

Scott Bauer (0:28)

Yeah, definitely some dip buying. I'm very cautious about this. Over the weekend, if you read any Fintwit or just saw all the headlines, lots of, I'd say people throwing things out today about being the anniversary of Black Monday.

Personally, I don't think we're anywhere near that whatsoever. However, coming off a pretty severe sell off in these sectors here, I think we just need to be a little bit cautious until maybe later in the week after we get some of these reports, especially from Meta.

Marlee Caden (1:02)

All right. So let's dive in then to your big three today. You've got Vertiv as your first pick here today. I mean, they've tied to the AI Data Center build out. So a lot of conversations swirling about sustainability on that one, but year to date holding onto its gains of almost 30 percent. So how are you looking at Vertiv right now, Scott?

Scott Bauer (1:23)

Yeah, very short term on this one because they have earnings next week. But if you go back to earlier in the year to February or so, there's a really big gap technically, right around 199 area, 200 area. So I'm not doing anything right here where the stock is trading 208, 209 right now. But if the stock does trade down to that area shortly, I am looking to just sell a put spread expiring this week, so it is before their earnings. I'm looking to sell the 197.5, 192.5 put spread, collect about $1.75 for that. Anybody looking at that right now, you cannot get that credit right now, but if the stock does trade down to that gap area, that's what I'm looking to do.

Marlee Caden (2:10)

Alright, so really quick turnaround. Just this trading week, we're looking at. KG, what are you seeing in the technicals, and are any of those levels highlighted in the trade standing out to you?

Kevin Green (2:20)

Yeah, definitely. I mean, you can make the case that a bounce could actually happen for this name over this week here. You can see that over the last year or so, the stock has been really good at trying to consolidate and then try to break out to the upside here. And that's exactly what happened pretty much this time last year. Trading between around 150 and around $100, about $200 or so. We've got to have this stair step approach till we get to the upside here. Now we have this kind of blow off top type of pattern taking place back in May of this year. And we've been making lower highs ever since. Unfortunately, the downtrend continued below the 200-day moving average, which is somewhat of a warning signal. But the reason why I say maybe you could get a little bit of a balance over the next week or so.

Last week on the 15th, we actually had a really green hammer candle after seeing a breakdown. And we also have a gap that has not been fully tested as of yet. And we're also hitting the key area of support on this channel, on the daily chart here. RSI is trying to get above that oversold level. MACD is still in a bearish formation. If we go to the weekly chart, once again, you kind of see this trend of a pullback over the last three years or so. And we're hitting the lower end of that trend line, at least for now, losing the 20 week as well as the 50 week moving average. RSI, a little bit more of a bearish formation. MACD in a bearish formation. But once again, short-term trade like Scott's talking about, maybe we go back, fill that gap that we had on that daily chart before continuing the primary trend, at least on the daily, which has been to the downside.

Marlee Caden (3:46)

All right. We've got those earnings on the 28th, but this trade not including that potential catalyst for Vertiv, which is higher on the session today. They're up more than a percent and a half. Your next pick here, you've got CME Group, just fractionally lower today, but up year to date over the last year, slightly underperforming the market, but still positive on the last 52 weeks. Scott, how are you looking at CME Group?