Happy Saturday and welcome to our Weekly Digest! It was been a busy week full of earnings reports from the main tech players. There were clear winners such as $MSFT, $GOOGL and $F while others surprisingly disappointed such as $AAPL and $AMZN. The indices took these reports in stride and marched higher. We closed the week on a positive note with the $QQQ and $SPY posting new all time highs.
We had a great trading week as we managed to limit risk and maximize our returns by having options plays for this earnings season. Our biggest winners of the week have been $GOOGL, $MSFT and $F. Here is how we approached them, our entry and exit points.
For next week, with indices at highs we are becoming less bullish on the current market. A few weeks ago when all the analysts were expecting a correction of 20% in the market we remained tactical and waited for a reversal as we saw no real opportunity to press short. Now, when general euphoria has set in, we have trimmed our positions and booked our profits ahead of a new month. We continue to observe the overall market, which is still uneven. There are pockets of impressive strength while the bulk of the stocks are still trading below their 200 exponential moving average. This type of diverge does not usually end well for the overall market in the short term.
There are considerable headwinds facing the market which have still not been resolved. Most companies that reported earnings talked about supply chain issues and chip shortages, while inflation remains the elephant in the room. The FED meeting for November is on Wednesday and tapering is probably on the agenda. We strongly believe that the trend is your friend irrespective of the market (bullish or bearish). We continue to hold a portfolio of the strongest names out there but have less size than before given the huge move in the past 3 weeks.
$GOOGL
We have been pounding the table about $GOOGL’s earnings and how they might be fantastic given the weakness presented by most social media stocks. We have been long $2900 calls going into the earnings. While the first reaction was lukewarm, what followed was an impressive rally which made us a lot of money. Our calls which started the next day at a value of just $100 were sold for more than $7000. In addition we bought the common stock at 2800 for a huge run to 2950+. We continue to hold $GOOGL as its report has been one of the strongest this week compared to its peers.
https://www.tradingview.com/x/DefZg4g4/
$MSFT
We had a great trade in $MSFT pre and post earnings. We were long the 305-315 calls before the earnings which we exited for a triple. In addition we bought some lotto $315 before the report which rendered another 300% return the following day. After $AAPL and $AMZN disappointed in their earnings reports, we bought some $MSFT stock on Thursday night which offered us a great trade from the low 320s to 332. We are still long the stock but have reduced our size.
https://www.tradingview.com/x/1gfcfUM4/
$F chart
This was been a very nice surprise for our portfolio. It is the first time we engage this name for earnings. We have been closely watching the developments of this company and its push into the EV sector. As Credit Suisse upgraded the stock to $20 before earnings we decided to put on some lotto calls $16 and $17. $F delivered impressive results and guidance and we doubled down in after hours by buying the stock around 16.3. Our calls offered a great boost to our portfolio as our average gain on them was around 400%. We are still long the stock going into next week and we have added on weakness on Friday. We believe that $F can be a great swing trade for a while and that most dips are great buying opportunities should the overall market grind higher from here into the year’s end.
We hope you had a great week! We tried our best to keep you updated and most of our earning plays worked very well. We did lost some money in $AAPL and $AMZN through options. $GOOGL, $MSFT and $F have been a great boost to our portfolio which ended the week with a positive return. As mentioned before, we are cautious going into next week and will look to day trade more rather than stay invested since we are approaching overbought territories. Parabolic moves such as $TSLA are not helping to tame down euphoria which in most cases leads to sell offs.
After a long week of earnings, have a rest, recharge your batteries and get ready for the last two months of the year. At Eclubtrading, We Grow Together!