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Apple's Valuation is a JokeApple refuses to provide forward guidance off the back of weak iPhone sales, and, of course, all the uncertainty stemming from COVID-19. Yet, they order more iPhones, along with running a convincing PR campaign, to promote that fact, and pump the stock, of which, they are one of the largest buyers. Over the next 12 months, revenue is obviously going to disappoint vs the previous 12 months, so why wouldn't that have a negative impact on the company's valuation? Imo, it does, and it will. Investors who pay $2 Trillion dollars for a company whose demand relies heavily on customers' appetite to shop, off the back of easy access to credit, should understand the sensitivity of Apple's business model to tighter monetary conditions. The 25 year growth farce (credit cycle) is finally coming to an end with the onset of the post March crash irrational exuberance. The FED and Government have nowhere else to hide. When rates rise, and the 10Y yield is back at 1.25%, let's see how much money flows into risk, particularly when $18 Trillion globally is happy to sit in bonds right now, and endure NIRP. Rates will rise, folks, and bagholders beware - growth will get hit first, and the hardest of all. Trade accordingly. Thanks for your time today guys. I thought it fitting that on the day SPY makes new all-time high's, to rant about how overvalued growth still is. If you enjoyed today's analysis, please hit the Like button, and Subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research.
NASDAQ:AAPLShort
by Hedge_Of_The_World
11
Tesla Has an Outside DayTesla has obviously had an amazing run. This morning it spiked as high as $2,129, more than 900 percent above its 52-week low one year ago. But TSLA hasn’t held that level. Its high occurred in the first minute of trading, and prices quickly knifed under $1,940. That’s resulting in a large outside candle on the daily chart. This is a potential reversal pattern – especially when it occurs at a big round number like $2,000. Happening early on a Monday is also a potential sign of capitulation buying from retail investors submitting market buy orders over the weekend. TSLA’s stock split, which takes effect next Monday, August 31, is the big catalyst. While this can definitely be a positive for a high-flying technology name, the euphoria may be priced in after TSLA rose more than 50 percent on the news. (It was announced after the close on August 11.) Today’s candle is similar to the July 13 failed breakout (also on a Monday). TSLA and several other big Nasdaq stocks drifted for a month after that session. Traders may want to start looking for a deeper pullback in TSLA, and not buy the dip too quickly if sellers take charge.
NASDAQ:TSLA
by TradeStation
3
Implied Volatiliy a Risk Pre and Post Earnings AMZN AAPL GOOGLI want to point out two things in this post: 1. The elevated implied volatility before earnings on blue chips stocks is per se a risk factor due to high call open interest and the following reduction in implied volatility post earnings. 2. The SKEW index is signaling increasing tail risk. The first point: As I’ve pointed out in recent posts, high open interest has been a tailwind for stocks as market makers are short calls and forced to buy the underlying without any other purpose but to hedge. Before earnings, implied volatility (IV) on stocks rises significantly. For out-of-the-money options, the delta rises with higher IV (this makes intuitively sense because higher volatility means a higher probability for the option to get in-the-money). As IV rises before earnings, the sum of the delta dollars rises. This is forcing market makers to increase their notional hedges, i.e. they need to buy more of the underlying when their net short calls (status quo) in order to stay delta neutral. Post earnings IV falls . This is a risk when market makers are long the underlying stocks, and traders long the options. When IV falls (all else equal) the market makers may sell the underlying stock no matter how good the earnings reports are. The second point: The SKEW Index is derived from S&P500 options, and measures tail risk, which is the risk for outlier returns. When the SKEW is 100, the option market is discounting negligible tail risk. As the SKEW rises above 100, the tail risk is increasing. The SKEW is not a timing instrument, but worth watching as it reaches extreme levels (now >140). In summary: The large cap stocks have had an amazing outperformance as I’ve highlighted in recent posts. Even though they may beat earnings expectations, the structure of the options market may be a headwind post earnings. The SKEW is signaling higher tail risk.
Editors' picks
S
by eirikb007
1
NFLX Rollercoaster Week. Bullish FridayNetflix dipped sharply on earnings miss. Weak subscriber forecast. Beats revenue in Q2 report. Revenue Estimate $6.08 B Revenue Actual $6.15 B Jim Cramer predicts a rise in FANG stocks after yesterday's pullback. Yesterday's pullback occurred due to sellers collecting profits. The market needs to consolidate before it continues trading up. Pullbacks are healthy. Netflix has been hitting higher highs. I predict the upward trend continues today. Please always do your own research. This is not advice. I'm here to learn. Thoughts?
NASDAQ:NFLXLong
by abreubarbara
MSFT ends wave 5 started back in 2009 - FAAMG coming to an end?I did a quick wave analysis over the last several decades. If you mark the start of a new motive wave cycle starting on the 2009 low, you get a very nice motive wave cycle. It technically came up a dollar short. However, wave 3 ended with an overshoot. So there may be a touch more left in it, but it looks like it might have reached the end of the road. Will there be a large correction? Is this a an indicator that FAAMG stocks have ended their historic run. Is the bubble going to burst soon, this year, next year? Or maybe it is just a bunch of BS and it will just keep going up.
NASDAQ:MSFTLong
by Dr_Roboto
Facebook Exits Triangle as Nasdaq Takes the Lead AgainFor several weeks, value stocks like airlines, energy , financials and industrials have outperformed. Coronavirus hammered these companies the most because they’re very sensitive to the economy, so it’s not a surprise that they enjoyed strong bounces as the social lockdowns ended. The Nasdaq-100 underperformed during the same time, but didn’t roll over. In fact, it snuck to new record highs last week as Apple broke out of a triangle. Amazon.com also broke out, while other megacap technology names like Microsoft and Alphabet squeezed into tight ranges. And then there’s Facebook, which broke out on May 20. FB’s catalyst at the time was the launch of its new Shops service catering to small businesses. It then formed a high and tight consolidation pattern above its January highs. Last week it formed a bullish inside candle, and today it’s breaking through the top of that range. This could be a positive sign for FB and the Nasdaq-100 in general. “FANG” stocks and other large growth names have been the backbone of this market for years. Now that the value bounce in energy and financials is pausing, will money flow back into the established leaders? By the way, GOOGL is flirting with a trillion dollar market cap just now. FB follows on the list with a valuation around $680 billion. How long before the social media-giant is viewed as the next member of the club?
NASDAQ:META
by TradeStation