MEGA8 Updated Data + AMD & Alphabet Earnings Today
Nasdaq and Oil Technical charts
Let’s first take a look at some options and chart analysis for the key earnings reports due out after the close today:
AMD options straddle are pricing a $13 move which represents an 8% move. We used the 11/1 Expiration 162.50 straddle to price the AMD breakeven. There are about 85k calls in total above 157.50 with the bulk of them coming between there and 165.00. There are 6k puts on the 150 strike so our guess the market makers will want to see a move somewhere above there but below $157 by Friday.
As far as the chart structure AMD sits right at the 38.2% Fib Retracement, this is coming off of the ATH and we would suspect this area to continue to see sellers at first. We would also expect a subpar earnings to see sellers come in and start to reprice this stock lower. The only thing to change our minds here is a weekly close above $165:
We also have Alphabet reporting today after the close. GOOGL options straddles are pricing a $11.50 move which represents a 6.8% move. We used the 11/1 Expiration $167.50 straddle to price the GOOGL breakeven. There are about 85k calls in total above $165 with the bulk of them coming between there and $180. There are 53k puts down from $167.50 to $150 with about half of that open interest sitting between $165 and $160. The market makers sweet spot would be $163/$164 area by Friday.
As far as the chart structure GOOGL sits right at the 21p VWMA, this is a pretty key level on the weekly. Our base case is still positive on GOOGL as long as we get a close above this level this week $168 is key for bulls. A rejection here is confirmation of a longer term top formation with a rejection again at the key 21p:
Another stock we want to highlight today is the move in Cadence Design Systems (CDNS). They make computational software that’s used in the semiconductor space, the company announced (EPS) of $1.64 which were above the consensus estimates of $1.44. Revenue also beat coming in at $1.22B above forecasts of $1.18B. When we look at the chart however, we find ourselves once again at the top of the range where sellers should be willing and able to lean into this fresh advance. We like the basing pattern here because it provides clear cut long/short entries which create a nice trading band. Obviously as traders we would be sellers in this area with stops above $290:
Alright, we finally have updated our data for the Magnelibra MEGA8s and its ripe timing as Tesla has once again kicked Broadcom out of this Elite 8. Here is the data on the net changes since we started tracking this grouping in May 2023. Nvidia still by far the percentage gain leader:
Nvidia is the obvious market cap gainer since May 10th 2023 as well:
Here is the chart of the MEGA8 total market cap $7.4Tn gains since May 10th 2023 just massive amount of capital going to this grouping:
We continue to see capital and leverage being deployed into the long equity theme forcing players to continue the buy programs. We will see if better pricing and patience is warranted ahead or if it will just continue on as is with minimal pullbacks.
As far as the MEGA8s tracker, for the new subs this is our long only basket designed to display the total performance of a long only basket consisting of the top 8 largest mega caps.
We added a hedged value to it, displaying a potential weekly hedge mechanism to try and maximize and capture option premium. The values and the hedge for the week are always displayed and obviously this is for educational and potential hedging demonstration purposes only.
We show the data and indicate what would be one example of hedging a basket like this. Our goal is to get you to think like a trader that hedges and minimizes overall risk. Obviously buying and holding is what the majority of people do, but for our grouping that wants to be a bit more proactive, we demonstrate how to create a basket, how to potentially hedge and how it would affect things overall. Obviously in an up market being long only would outperform a hedged portfolio, but in certain cases, doing things in a proactive manner could lead to some overall minimal protection in case markets do start to decline. We want our readers to continually learn, to create their own trading styles but to have some other information that may cause you to think “outside the box.” Which is truly always our mindset we are trying to create!
This weeks hedge in front of all the tech earnings is the QQQ 500 calls. This area has been pretty formidable and our stop on this by Friday would most likely be a 2.5x move in this option on a closing basis. As always option hedges are risky if naked however being long a basket like this means we are long the underlying products and the hedge should just be a certain percentage of your portfolio, and as always a product of your risk adversity.
As far as futures go, you guys know we continue to push the bull theme in equities until proven otherwise. The Nasdaq futures have strong bullish technical support and the areas below to watch are highlighted on this chart. Bulls are in control until these support areas give way, 20050 then 18722. Wouldn’t a move to ATH pre election just seem apropos:
As far as Crude Oil, well it continues to see selling pressure and we are certain a lot of this has to do with a Trump US election victory and a negotiated end to most major conflicts. We also believe this could be front running a global slowdown as well, so from our fundamental and technical perspective, sellers are in control and any rallies will most likely be sold. A break of $63 would see flash selling and probably a post event buying opportunity for fast money:
Alright that is it for now, we will be back with more data later. This is our last free view post, most of our proprietary data will be posted behind the paywall, but as always we will keep you up to date on anything we see relevant. Good luck, keep pressing forward and please if you can support our work and or at least share it so we can grow our subscriber base and provide many more with the insight we think you need in order to be the best you can be in this investment and trading world.
Here are yesterday’s settlements for the markets we cover, with the new 5Y and 2Y issues added post auction yesterday:
