BY ANDREW GIOVINAZZI

August 8, 2023

Yo Pit Crazies,

Apple Inc (Ticker: AAPL) darn near put traders into a tailspin with their no rev growth quarter. I highlighted a trade Mark and I did on Friday, but the real story is part of the slack has been taken up by Amazon.com Inc (Ticker: AMZN).

AMZN had rev growth but earnings are still under what they took in for 2021. I don’t expect the rally in AMZN to continue but the tail of the tape cannot be more different.

You see, when you look at the straight numbers for momentum and volatility, different opportunities take shape.

Let me remind everyone: options trade price, volatility, and time. You can choose how much of one or the other the position is exposed to. Once a trader understands this, their world changes.

Left side 10 day momentum for AAPL is red, AMZN green. IV for both stocks look relatively inexpensive.

The issue right now is that AAPL earnings were so bad, they almost pushed us into Zone 3.  And the CPI number comes out later this week.

That creates lots of momentum … which creates trading opportunities.

Momentum in VIX is Super Important

Friday was a big up day in momentum. It didn’t last long, even though AAPL earnings killed the market. Microsoft Corp (Ticker: MSFT) is down 10% from the peak just a few weeks ago.  AAPL is closing on 10% from the peak right now.

If I am using VIX as an indicator, traders didn’t care that much yesterday about AAPL down another 2%. The bigger issue is once again the CPI and how prices are fairing. I think there are plenty of cheap stocks right now that are not big tech companies – that’s where the money will go. I will say that VIX didn’t recover from the lows of Friday, so there’s still something on the horizon.

CPI will be an event one way or the other, and I do expect VIX in the 13 handle by Friday if this keeps up.

To Your Trading Success,

AG