Good morning,
We had a mixed day in the markets yesterday. The indices pushed higher in the first few hours only to retreat and close flat or slightly down. The small caps were disappointing as they were rejected again at the upper part of their channel. My portfolio did well considering the move as I became focused on $GOOGL after it pushed above 2800. It was a wild ride of more than 150 points, which I hope you followed. My call options which were lottos at the beginning of the day rendered a nice 200% profit by the close. I have exited them and the common stock after $GOOGL slipped below its previous high of 2925. To remain engaged I bought some lotto calls for this Friday, the $3000.
$MSFT was equally impressive as I have maxed out my calls as it pushed as high as 326. Very extended here, will need a few sessions to digest this move most likely. It seemed that yesterday, only $MSFT and $GOOGL kept this market from tanking, so be careful out there if these 2 names take a breather today.
The lower Treasury yields helped the $QQQ post a new all time high, but the weakness in the banks and small caps left a mixed message for investors ahead of more earnings today. $AAPL and $AMZN are the last two juggernauts reporting after the close.
Last night I focused on $F as I bought more $17 calls for earnings. $F crushed estimates almost doubling analysts expectations. In after hours it went past its yearly high of 16.7, so my options should be a nice winner this morning.
As I am very light going into today’s action, my focus will be on managing my $F exposure, to see whether $GOOGL offers a nice day trade and to position for $AAPL and $AMZN after the bell.
Today, I will focus on 3 charts, the $QQQ, $AAPL and $AMZN in order to offer some insight in case of strong beats or disappointments from their reports.
$QQQ chart
The tech sector made a new all time high as $GOOGL and $MSFT were impressive. It drifted lower into the close and posted yet another doji type candle. We are a bit extended here with the 8EMA all the way down at 375. This is why I am hedging my option plays for earnings with some $QQQ puts expiring next month. For today, an inside day above 380 would be constructive ahead of the 2 earnings reports.
https://www.tradingview.com/x/IRdtStJy/
$AMZN chart
I am eagerly awaiting $AMZN’s report. The chatter about a stock split continues this quarter as well as the new CEO might finally decide to offer retail investors a chance to get in on a fabulous business. Without such a split, $AMZN will remain trapped in the recent yearly channel and will be difficult to trade. Most likely this will not happen, so keep your expectations low. In the unlikely scenario it does happen I have some 3650 calls to take advantage of an explosive move. First resistance area is 3462 followed by 3550 before the all time high at 3773. For support in case it misses expectations, 3297 needs to hold.
https://www.tradingview.com/x/FO8ZIxj4/
$AAPL chart
$AAPL has been building a nice bull flag above the moving averages but did not participate in the $QQQ rally this week. In case of a strong report, it needs to get above 150.84 and 151.68 for a push to 155-157. I will have an option play in place for earnings and keep some long dated calls for January for more exposure. A positive catalyst would be the announcement of guidance which lacked in the previous year. In case $AAPL disappoints, it has big support around 144-146 and a bigger one around 138-140. See how much the chip shortages continue to affect the delivery times of its new products.
https://www.tradingview.com/x/pj1eWSUj/
With futures flattish currently I suggest one remains cautious ahead of the 2 big earnings reports after the bell. See how $F is treated and whether $GOOGL and $MSFT can continue higher. $AMD was disappointing yesterday as it moved chaotically despite an impressive report. See if can offer a good cashflow trade today. Keep in mind that the FED meeting next month will offer some clues on whether this market has priced in tapering and the possibility of interest rate hikes next year. Earnings have been solid and offered promising guidance, but after the recent run, this may not be enough for the indices to offer a Santa Claus rally into the year’s end. For more detailed analysis and our entire portfolio I strongly suggest subscribing to Alex’s Morning Game Plan.
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