Rare – Market Delivers Punishment

We saw a really interesting trend develop among some of the mega caps last week…

…they got punished for good earnings.

Take a look at MSFT,  they had great earnings and continue to show massive cloud growth…but the stock got slapped last week.

TSLA, the darling of Robinhood and the dread of traditional investors blew the doors off its earnings, yet after a brief shot higher in the AM…

…the stock took it in the chin.

There is no doubt that the mega cap tech names have had quite the run up.  

With many reporting this next week, we could be looking at the most consequential week since June.

AAPL, AMZN, and GOOGL need to have great calls…even then those stocks might be down on the week.

There is a lot on the table for mega caps.  We are going, in the coming days see:

-Their Earnings

-A deal out of congress for more stimulus

-A likely drop in covid cases in CA,  TX, and FL.

With a new stimulus bill coming,  if tech earnings are soft it is going to push money hard into Banks,  industrials, and energy.

 It could even push money into airlines if cases get good enough.

Heading into this week, here is what the market is expecting out of the big three and the S&P 500 based on straddle prices:

AAPL is looking for about a 19 point move by the end of the week…this might be too cheap

AMZN is looking for a 225 point move, this might be pretty fair

GOOGL is looking for an 80 point move…low for google, but that stock has been boring

The SPX is pricing in a 70 point move either way….this is probably too cheap by a long shot

On the whole what happened last week, I think what happened last week continues this week,  despite tech earnings.

Your Only Option,

Mark

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