Tech Earnings in Focus
Alright well the markets rebounded some of the selloff from yesterday and today we await the all important earnings reports from the following tech giants. With that lets take a look at the MEGA8s Tracker settles from yesterday and please note as of this update the QQQ 525C is this weeks hedge:
This was a nice bounce but in all honesty we believe the pressure is still on and this weeks earnings will either provide support to the bulls cause or if anyone of these corps. disappoint then we would believe a longer term top is forming. We know the technical levels in the Nasdaq futures to watch and we will not make any directional determination till these levels are closed upon on a weekly basis. As far as those levels, let’s look at the Nasdaq futures chart:
From this chart we can see that the bull/bear pivot remains at 21608. We would suspect mechanical and short term traders will use this level as their long/short bias. As far as the bigger weekly picture, as we stated, we will not make an opinion on a longer term directional change unless this trend channel is broken. One thing to note is we have consolidated around this pivot level for 9 weeks now. This gives us some very good information, first it tells us large institutions are selling this area and or diversifying out of the tech stocks into the broader market. Why do we say this, we say this because the price has not moved, it hasn’t moved besides billions of consistent retail inflows of buys via general buying and systematic and consistent longer term IRA, mutual fund and 401k flows. I think this reality is often overlooked and its important to determine and point it out that the equity markets always exhibit consistent buy flows and on a relative fixed basis. So when we see a flat line around a high point pivot, its pretty easy to determine that the large block institutional types are in there with strategic sell orders, disbursed at various points as to not be detected but rather disguised and rightfully so.
I say rightfully so because everyone can’t monetize at the same time and thus volume and liquidity metrics are deployed to properly sell any blocks of stock without causing a big disruption. So with this in mind, we feel the current pivot is an important one and holding the 21VWMA was also important to the overall market structure. However we have a bunch of earnings coming up which may force things one way or another, these are the corps on tap today after the close via EarningsWhisper:
So let’s look at each one to see what the options break-evens are, to try and gauge a sentiment and a market maker sweet spot. First let’s look at Tesla, and we will use the $385 price as the bracket for expiry on 1/31. The calls cost $19.25 and the puts cost $17.83 so the break-even straddle is indicating a price move of 9.63%. There are 60k puts with about 40k+ puts currently in the money. The calls have 25k plus in open interest above the $385 strike. Its tough to say where the sweet spot lies here but I would say it seems pretty balanced but Tesla has also lost over 20% from its highs in December. For now we suspect we may see an initial bounce and to expect sellers to show up around the $415 area if given a chance. Good support is far below at $330:
When we look at META, we will target the strike of $675. If we look at the break-even here the calls are value at $22.65 and the puts are at $26.15 so an obvious volatility sell off here as calls are being discounted and demand tilt for puts here as the call is over 10% cheaper despite being $3 in the money. So this indicates a potential 7.2% move. There is some decent put interest down at $650 and $640 and the $700 call strike has 10k of open interest, so safe to say market makers don’t probably want a trade above that level. The market makers may be looking and targeting an area near $660. IF your bearish a $660/$640 put spread is going for $7.4 so the risk is $7.4 to make $20 or a 2.7x risk reward payoff. Honestly though nothing is standing out here. META has been super strong and stops on longs are most likely moved to the $640 area below:
As far as MSFT, lets target the $445 strike for break-even and the break-evens cost $19.68 for a potential indication move of 4.4%. This one looks like the market makers definitely will be looking for the stock to remain below $450. With that in mind if we look at a negative bias and look at the $440/$430 put spread trades for $3.40 and the full value would be $10 or a risk/reward trade off of 2.94x. The $412 area seems very important longer term so that is the area to watch going forward:
Ok so keep an eye out today for directional bias in the overall markets, we believe the big institutions have been decreasing their exposure to this group overall and spreading the risk out from a lot of these concentrated names. Today’s earnings will shed some light on the markets potential to continue to absorb this selling or if we roll over.
As far as our other data, here are yesterday’s settles:
As far as the CTA Markets Sentiment a lot of moves to neutral so take note here as sentiment seems to be moving toward a more neutral bias with the equities and metals still holding onto long biases:
As far as MicroStrategy, the stock was lower yesterday and the overall return is -6.37%:
We continue to provide our viewers with this covered call strategy because as time moves forward and the price of Bitcoin moves, we are very interested to see how well they will fair should BTC exhibit a reversal in its price trajectory.
Ok good luck today after the close everyone, please reduce risk if you can and reevaluate your positions once we have more data from all of these reports. The AI revolution is here, the winners are yet to be determined, but rest assure the volatility will continue as the winners and losers are shaken out. DeepSeek exposed the gravity of the race, the costs associated with this technology and the future use case are all yet to be determined. Thank you to all our followers, subscribers and those that can at least share our work to grow our base. We greatly appreciate it and we hope you continue to find value in what we have to say and the data that we present. Till next time, cheers.
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