Thank you guys for joining me and welcome to Episode 8 of Season 2 brought to you by Magnelibra Trading & Research. This episode is entitled “Tech Earnings & FOMC No Change”
Quick Disclaimer: The following podcast is for educational purposes only. This is not a solicitation to buy or sell commodity futures or options. The risk of trading securities, futures and options can be substantial and may not be appropriate for all listeners.
We didn’t really comment on the FOMC meeting yesterday because honestly the whole thing was a non event and went as expected with no change. Today we saw the ECB take over the rate cutting reigns from the FED and cut another 25bp and drop its deposit rate to 2.75%. So we know the regimes are all moving in the same direction, as usual they are just passing the baton back and forth to each other.
So with those central bank decisions we know the big deal yesterday was the earnings reports from the tech giants, let’s see just how everything washed out and is being reflected in today’s action. First up Tesla missed estimates across the board, it missed on the revenue, operating income, gross margin, and EPS prints as a result initially TESLA did jump after hours and is holding steady right now +$12 +3.5% on the day and we still believe $414 is the resistance area that will cap it for now with $380 downside support:
Next lets look at Microsoft who did beat both top and bottom lines Revenue and EPS, but it seems the cloud sector did falter and didn’t meet expectations and this hit the stock 5% immediately. Yesterday’s post highlighted the $440/$430 put spread for $3.40 which offered a decent 2.94x payoff and today, its well near full value with one day to go for expiration, but you could obviously take profits or buy a call to protect or do a host of other things if you went into this thing with a bearish tilt! We also highlighted the $412 area as key to overall support for the bulls going forward:
When we look at META, it easily beat estimates for both revenue and EPS however forward guidance was not as favorable. The stock is seeing decent two way flows and is currently up 1.7% or so. We like the high mark today and for tomorrow on the weekly the bulls are still easily in control and that will not flip unless the $640 area gives away:
So now looking toward today Apple and Intel, lets take a look at the options markets. For Apple we will target the $237.50 strike for the break-even straddle estimates, currently the straddle is pricing in a move of $10.07 which is a move of 4.2%. $230 seems like a nice target post earnings given the supply of calls and puts and above $240 gets costly for the market makers. Apple has been on a good run here and we don’t really have an opinion either way here. The bulls are in control and only a move below $220 would change this sentiment here:
We aren’t going to look at Intel for options indications but rather just note the chart and how important the $18.50 level is here. This stock has been consistently hammered for over a year, but we do like the base line support it has received over the last few weeks, consolidating. Given this our bias is to the long side with stops assuredly positions right at $18 or so. Longer term we see good risk/reward with this equity at these current levels but would like to see a move > $22 for confirmation:
Ok that is it guys, here are the settles from yesterday:
Here is the MCA CTA Market Sentiment which has new equity longs, an Euro short and Yen long change on the day:
When we look at the MEGA8s it was a mixed bag with Nvidia the day’s big loser:
Here is the MSTR covered call selling strategy update:
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