After every week of bearish motion, Federal Reserve Chair Jerome Powell’s Jackson Hole remarks had been a welcome curveball. Most indexes ripped nearly 2% on Friday on hints {that a} rate-cut cycle may kick off in September. Rate cuts are a tailwind for development, and tech sits squarely in that lane. Most of the “Magnificent Seven” popped on Friday’s information, but the market appears to have neglected one of many giants: Microsoft — which units up my trade thought for the week. On the nine-month each day chart, MSFT is stabilizing close to its decrease Bollinger Band, a spread software many merchants use to identify “garden-variety” pullback bounces. In regular corrections, value typically tags the decrease band after which mean-reverts—precisely what I’m waiting for right here. The trade is not “on” but, nevertheless it may agency up as quickly as Wednesday when Nvidia studies. A robust NVDA print tends to lift all the tech complicated — MSFT included. For affirmation, I’m watching: RSI (Relative Strength Index): A versatile momentum gauge that flags overbought/oversold situations and helps spot reversals (so you are not shopping for into extremes). On MSFT, RSI remains to be trending down, so it is a ready recreation — search for it to twist greater earlier than contemplating the entry. MACD (5,13,5): MACD is a traditional reversal software. I pace it as much as (5,13,5) as a substitute of the usual (12,26,9) to get earlier reads. The MACD line (blue) hasn’t crossed above the sign line (yellow) but, nevertheless it’s shut. A bullish crossover—or at the least a rising histogram—would strengthen the reversal case this week. For my CNBC readers: I’m opening up my options trade scanner at no cost just for in the present day—seize just a few extra trades like this whereas it is stay. Here’s the scanner . The trade setup: MSFT 500-505 Bull Call Spread To take a bullish shot on MSFT, I’m utilizing a bull name unfold — outlined danger, outlined payoff. With value right here, the bottom setup is: purchase the $500 name and promote the $505 name as one unit. If MSFT drifts a couple of bucks, I’ll regulate the strikes to bracket value (e.g., if MSFT is round $507 tomorrow, a $505–$510 unfold works). The aim is to maintain the stock buying and selling contained in the strikes so the danger/reward stays optimum. If MSFT expires at or above the quick strike, the unfold pays its full $5 worth — turning a ~$2.50 debit right into a 100% ROI. With 10 contracts, that is $2,500 in danger for a possible $2,500 revenue. Here is my actual trade setup primarily based on present MSFT value of $503: Buy $500 name, Sep 19 expiry Sell $505 name, Sep 19 expiry Cost: $250 Potential Profit: $250 -Nishant Pant Founder: https://tradingextremes.com , https://tradewithmaya.com Author: Mean Reversion Trading YouTube, Twitter: @TheMeanDealer DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and don’t replicate the opinions of CNBC, NBC UNIVERSAL, their dad or mum firm or associates, and should have been beforehand disseminated by them on tv, radio, web or one other medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click right here for the total disclaimer.