META & MSFT Profit Taking, AMZN on Tap

Indexes are moving toward supports will they hold?

Mike Agne

Oct 31, 2024

Let’s start out with a quick recap of Meta (META) and Microsoft (MSFT) Earnings:

Meta (META):

Mixed Results: While Meta reported better-than-expected earnings per share (EPS), the stock price declined due to concerns about future investments in AI and other technologies.
AI Focus: The company emphasized its commitment to AI, which is expected to drive future growth but also increase costs.
Revenue Growth: Revenue grew year-over-year, but the market was looking for stronger growth figures.

Microsoft (MSFT):

Cloud Growth Slowdown: Microsoft's Azure cloud business, a key growth driver, showed a slight slowdown in growth compared to the previous quarter.
Mixed Outlook: The company's outlook for the next quarter was somewhat cautious, which weighed on investor sentiment.
AI Investments: Microsoft's AI initiatives, particularly in partnership with OpenAI, remain a significant focus for the company.

Overall, both Meta and Microsoft reported mixed results, with investors expressing concerns about future growth and spending. The market reaction to these earnings reports was negative, with both stocks declining in value. (GeminiAI)

Onto todays big tech earnings announcement coming from Amazon after the close. Let’s take a look at the options markets where we will target the $187.50 straddle for expiration tomorrow and its about $12.50 posting an expected 6.7% move in the stock. There’s 85k open interest in the puts from $190 down to $160 and about 155k open interest from $185 up to $210. This is telling Market Makers would love to see a move down to $177. A move to $177 at current prices is a move of 4.8% lower. The $185 put for expiration tomorrow is trading at $5.30 and would offer a decent risk reward payoff on a move to $177 at full value that option would be worth $8 or a potential gain of $2.70 or 51% gain. As always these are all hypotheticals and you need to evaluate your own trading parameters and come up with strategies that fit your program. One thing I like to do is give you an example of how to structure known risks and buying options is one of the best ways to limit risk on any individual trade, because you risk what you pay or how much you buy!

Looking at the chart of Amazon, back to back weekly closes below $189 would be problematic for the longer term bulls here:

So watch what happens after the close today and remember also that we have the Non Farm Payrolls report tomorrow where the forecast is 110k job gains! Will tomorrows print be a negative one? Well we doubt it as it has not been the trend on the headline number but the revisions seem to cut the headline down each and every time. Anyway with that in mind lets look at a few technical charts.

First up the QQQs, without a save later today or tomorrow, the 485 area, our line in the sand will be breached and this will open the door for a continuation move lower:

When we look at the futures indexes such as the SP500 and Nasdaq, we see similar setups. The SP500 has 5725 as our base support target area and a close there would also open further downside:

As far as the December Nasdaq futures they are currently trading right on our line of death at 20050:

Equity index highs may also begin to coincide with another round of Yen futures strength as we see technically the Yen seems to be trying to bottom out here:

Even the setup in Gold seems ripe for a pull back but we will await a move to $2678 to confirm a potential top here for now:

When we look at the SP500 vs the NASDAQ futures spread, we can see that the SP is once again trying to hold the line and rally vs the Nasdaq vis a vis:

Ok that is it for now we will leave you with yesterdays settlement updates and the MEGA8 data. Our subscribers will continue to get these data updates so we hope you become a subscriber and support our work here and learn alongside our subs as we try to retrain your mind to think outside the box.

Here is the MEGA8s data updated, you can see our QQQ options hedge has worked out here this week and we will continue to demonstrate how you can hedge a long only basket of stocks like this: