7/20 Recap

Tesla and Netflix both sold off hard on earnings down almost 9% each, leading the market lower today. The /NQ is down 250 as I write this and now we’re probably in a bit of a holding pattern until we see what the rest of the big names do starting Tuesday. Teslas decline really shouldn’t be a shocker to anyone, I know I’ve been pretty vocal on how I feel about Tesla. There is always that hype because of Musk and what it may or may not do in the future, but as of today, it is a carmaker and it has declining operating margins which is not optimal with this multiple. It is pricing in a future of not just delivering full self driving but dominating the space, which may or may not occur, but they are nowhere near the leader in the space like many retail investors think. Google with Waymo is much further ahead and has been using self driving taxis moving real humans around for years without a single death. Tesla has over 30 autopilot deaths at the moment and that number could be materially higher depending on how they’re counted. All that talk about margins and it being the next Apple are just talk for now because operating margins came in at 9.6% and they guided down production for Q3. These just aren’t things you want to see at a valuation near $900b. For reference Apple operating margins are 30%.

As we look at the Tesla chart below you see it is reversing course right at the downtrend it has been in for the last 2+ years. This is a series of lower highs and when it finally closes above that trend, you can buy it. Of course as you can see, for now, it is putting in a bearish engulfing candle on the weekly. How this candle closes the next 2 days is important but there are open gaps below to be filled now.

The SPY remains in a very healthy uptrend, it hasn’t even tested the 8 ema in 8 days. Tech stocks are killed today with the /NQ down 200 and the VIX just turned red. The bulls are in complete control and I suspect we really do nothing the next few sessions until we hear from Microsoft,Meta,Amazon, and Apple next week.

Trends

Amazon is naturally hit hard because of that XLY tie to Tesla I noted yesterday but it continues to dominate all the bullish flow on every timeframe. It’s going to be really interesting what they report next week. VALE continues to see lots of inflows as well. FCX didn’t see anything this week but you can see it in the 2 week and 1 month trends and it really had a nice move up on earnings today. They seemingly always position in these names properly right before the moves occur.

Week To Date

2 Week

1 Month

Today’s Unusual Options Flow & What Stood Out

106 Trades Today