Tech earnings in focus – eyes on the prize

Good morning and happy week!

This is another hectic week with earnings reports from the biggest tech giants, so everyone is on their toes, awaiting  a change of direction from $SNAP’s fall due to a change in privacy policies made by $AAPL. $FB, $PINS and $TWTR are targets, similar to $SNAP, but in my opinion $GOOGL should profit from this situation. Today we start slowly, with not big earnings announcements, and with futures flattish. Friday’s digestion got me out of all my stocks, except for $TSLA, and I am left only with my call options for all the tech giants. Infrastructure chatter has been going around this weekend, and therefore I am looking to see if there is a place for me to place some capital in steel. I am being tactical, because this is a week when things can go up and down and easily chop my last week’s gains.

$SPY Chart

This double top in $SPY at all time highs, combined with a red doji got me out of my call options, for a nice profit. I am waiting to see if the $SPY sees a bid today, or if it enters in a downtrend. The futures are flat in the $SPY, and theoretically it has space to go down to its 8 day EMA $448.29 or even to $445. I would wait for the moving averages to catch up and for market discovery to show us a clearer direction. After 8 impressive days a digestion is healthy, and of course talks of hyperinflation are hurting the market.

$QQQ Chart

The Nasdaq went close to the 8 day EMA, but held its position and tried to keep this bull flag it has formed. If it stays in an uptrend it should hold its 8 day and push above $374. It all depends on earnings, inflation and tapering talks. Today it might be a quiet day in the $QQQ until $FB reports after the close, but I am protecting my earnings calls with some puts I bought in $QQQ for the end of this week. You can also put a hedge on if you feel you are exposed in order to protect some capital.

$TSLA Chart

$TSLA made a new all time high on Friday, when everything else seemed weak. It was my biggest winner in the last month and therefore I bought some stock to trade around because it closed impressively on Friday afternoon. If the $SPY goes in a downtrend I will trade around it or even maybe sell a call against my stock, for the end of this week. It is extended and I would not chase it today if you missed last week’s impressive move. The 8 day is all the way down to $864.44, but if it is any good it should hold above Friday’s low of $890.96. It is possible to get a red to green kind of move in $TSLA, in which case I will trim along the way, and leave a trailer. My cost average is at around $877 and therefore I have room to play around with it.

It will be a tricky day today with possibly sudden moves, and therefore I recommend to take slowly this tape and wait for market discovery. When it is earning season I tend not to stay in stocks and I prefer to stay out of the way because a move like the one from Thursday to Friday is very possible, and you can lose capital fast. If you have the chance to stay in options it is a safer way to approach the market, because your loss is limited and defined. I am also curious about the small caps move today, since on Friday they showed a sign of life, and if they do, they should be able to get out of their long channel, and offer us an opportunity to get invested in some growth stocks. However, this is like a side note to the whole tactic for today, as all eyes are on Tech and the S&P, with all the earnings, inflation & infrastructure talks.

Good luck!

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