Turmoil to Profit in the Market... and Tesla

Everything opened lower this morning with the exception to Verizon and McDonald's who reported their third quarter earnings and were awesome. The huge drop was a carry over from the down Asian and European Markets. From open, everything went up for the first 20 minutes before retesting the downside. Most stocks dipped slightly lower than where they opened, but once they hit that retest point, everything went up.

You certainly could have profited by buying anything except Catepiller and profited today, but you would have been best to wait for that retest of the bottom. Buying Call Options on Apple and Netflix were very good to profit especially if you held them until the end of the day. Alphabet (GOOGL) and Amazon had great movement, but because they report earnings on Thursday, their options are too expensive to mess with.

Tesla options got very expensive from open because the company has elected to move up their earnings report to Wednesday which is a week earlier than scheduled and 2 weeks before normal. Obviously they must have good news to move up the earnings report like this as we expect them to produce the company's first profitable quarter in a long time. There was news today that notable short sellers have gone long on Tesla stating their new Model 3 is going to put them over the top.

I am very disappointed because I had 2 weekly Call Options with a 260 strike price that I closed out yesterday afternoon. Those 2 options would have been worth 3700 each by the end of Tuesday. If Tesla produces a huge profit, I would expect the company to trade up to 420 by the end of the week.

Something interesting happened today when Verizon reported earnings. Most stocks that move up before earnings announcement typically sell off the next day even when they beat their earnings report. Verizon has been steadily going up for the past month. After the earnings announcement, not only did the stock move up, but it continued going higher after the market opened. That has not happened since July of 2017. Since the 2nd quarter earnings announcement of 2017, every report has beat expectations but the stock reversed it's premarket gains to actually trade lower.

Apple was the first company to have this kind of positive stock movement after beating their numbers on the second quarter of 2018. McDonald's today had similar movement. This is completely different from Netflix which traded down every day since their earnings announcement until today. This trend appears to be reversing with bell weather companies like Apple, Verizon and McDonld's. On Wednesday before the market opens we will get Boeing and AT&T earnings. Boeing will be is expected to be awesome and AT&T won't. I would expect the market to be mixed on Wednesday with some late day upward movement.

Upward movement is expected when Amazon and Alphabet report earnings this week. Both companies are around 200 points off their all time high that was established 3 months ago. What will be interesting is if they move up after earnings, open the following day higher and if they can keep those gains and move higher to get closer to their all time highs. FANG companies tend to sell off after reaching a huge increase. They were making new highs the past couple of quarters post earnings, so this feels different. 

3% 10 Year Treasury Note + Cat Forecast

• Caterpillar (CAT) earnings report beat forecast and was up but started to fade after the market opened today. The CEO projected their first quarter earnings being the high water mark for the year. From there the market as a whole took off to the downside. From CNBC Fast Money show they said that this was expected as their business is a cyclical business. Around the same time the 10 Year Treasury Note broke through 3% for the first time in a long time. Buying Put Options on almost anything were a great buy at this point.
• Verizon (VZ) peaked within the first few minutes of the market open and dropped quickly, but did not go negative. It ran up further, but didn't break that early morning high before falling with the rest of the market. I believe this will continue higher over the next couple of days along with the rest of the market as interest rates ease. Due to the low volatility of Verizon, I would not recommend buying options on them until their next earnings report.
• FAANG pain began. Facebook, Amazon, Apple, Netflix and Google dropped hard for the whole day. There were a couple of times it appeared they were going up, but they were just retracing their downward movement as they came down so quickly. Netflix bond offering was not discussed by most analyst as it was expected due to their high cost of producing content. Alphabet (GOOGL) numbers were huge and growing tremendously, but due to their increasing cost it was sold off today along with the rest of FAANG.
• There was news about Facebook (FB) user information being stolen and this may be the next shoe to drop that pushed Facebook back to its lows for the year. They release earnings Wednesday after the market close. I would be a momentum buyer of options on Thursday if it makes sense. Apple (AAPL) reports earnings next week but more weak iPhone sales are expected and the stock price continued lower. I am a buyer if the price drops to the low for the year around $152. I feel weakness in either of these means positive for Google as advertisers may leave Facebook and Google is the only other game worth dealing with.
• JP Morgan (JPM)  and other bank stocks moved sharply up within the first half hour of the market open before tumbling down below yesterday's low. They moved up to end the day and I would expect them to continue to move the same way over the next few days.