Trading Google and Verizon Post Earnings

Alphabet, Google's parent company, had a blow out 2nd quarter earnings report. The stock shot up post market to 1272 and opened near there on Tuesday morning. It wasn't necessarily a buy there. Based on the sharp movement downwards, it indicated that it would go down. The best bet would be to buy a Put option when it comes back near where it opened which happened around 9:40am. If you bought that, you could hold it for 20 minutes and sell it for a huge profit at 10am.

At 10am you could have bought Call options on GOOGL and held those for 20 minutes and sold those for a huge profit when it returned to 1271 and then be done for the day. Below show the same chart broken down by 1 minute intervals. The up and down movement was too crazy for the rest of the day even though it trended all the way down to 1249 before turning back up.

Verizon reported great earnings before the market opened Tuesday morning. It opened higher, but fell hard below Monday's close. This was a buying opportunity because it was due to go back up near where it opened. You could have bought Call Options with August 10 expiration for around 20 cents and turn around and sold them for 50 cents by the end of the day. If you did that with 100, you would be quite happy.

I hope this helps as this is the first blog where I broke down how to trade it.

FANG Exposed - Part 2

Which did you pick? Was it A or B?

What is the order of FANG on the chart that I shared yesterday?

Here is the chart with the companies listed above:

Company	Facebook	Alphabet	Amazon	Netflix
Ticker Symbol	FB	GOOGL	AMZN	NFLX
	A	B	C	D
Earnings Per Share	6.8143	37.2373	6.3429	2.3755
Price to Earnings Ratio	30.95	32.52	284.1	152.67
PE/Growth	1.34	1.89	13.15	2.78
Institutional Ownership	71%	78%	56%	77%
Gross Profit Margin	86.04%	57.41%	37.77.%	38.13.%
Long-Term Debt to Equity	0	2.46	120.59	185.52
Return on Assets	25.54%	13.39%	3.04%	5.46%
Return on Equity	28.79%	16.84%	11.86%	28.09%

So now I will address each of them for the next couple of days starting with Facebook. No matter how many people say they are not using Facebook anymore, there are still 10 times more that are using it. That number might be small, but if you do not use Facebook, do you use Instagram or What's App?

I don't believe that Facebook has really begun to try to monetize Instagram or What's App. Companies pay for advertising with Facebook because they allow you to market your service and products specifically to demographics that you desire. Therefore I believe Facebook has a lot of room for growth in sales numbers.

Facebook has the best Return on Assets of the FANG members and it looks even better when it doesn't have any debt. Facebook is growing and without fines and regulation, it will continue to grow. Even with an increase to fines or regulation, Facebook's financials can absorb it and continue to grow.

The drawback of Facebook which might be considered a strength is it is a service company with no physical products. Instead Facebook may be found everywhere from phones, tablets, televisions, computers and a variety of smart devices. 

FANG Exposed - Part 1

Jim Crammer coined the acronym FANG for Facebook, Amazon, Netflix and Google (now Alphabet) and many follow these stocks for gains when the rest of the market stalls. I find it funny when these companies are similar but there financials are different. So let's take some fundamental numbers of them and you tell me which one makes sense based on the numbers to invest:

	A	B	C	D
Earnings Per Share	6.8143	37.2373	6.3429	2.3755
Price to Earnings Ratio	30.95	32.52	284.1	152.67
PE/Growth	1.34	1.89	13.15	2.78
Institutional Ownership	71%	78%	56%	77%
Gross Profit Margin	86.04%	57.41%	37.77.%	38.13.%
Long-Term Debt to Equity	0	2.46	120.59	185.52
Return on Assets	25.54%	13.39%	3.04%	5.46%
Return on Equity	28.79%	16.84%	11.86%	28.09%

Tune in tomorrow to find out which is which, but which one would you invest your money into?

To me, A is the winner with B closely behind. I remember Crammer mentioning that he likes companies with a PEG (Price to Earnings Growth) over 2, but his favorite company Apple is below that. I feel that a number below 2 might be better because if your PE ratio is overextended, it doesn't matter what your growth number is because your PEG will still be high.

When I was in school, I was told that you want companies that have a PE ratio below 10. These days those only exist in high dividend companies that don't have growth. Dividend are great, but growth is how you build wealth. Therefore PE ratio along with the Institutional Ownership would eliminate number 3.

The bottom numbers are interesting and exciting. Company A has no long term debt where company C and D appear to be leveraged heavily. Would Company C and D be in this group if they didn't have so much debt?

If you take out the first line, Company A beats the rest of FANG. Ultimately you invest in shares of companies to share their earning power, so Earnings Per Share puts Company B far ahead of the rest.

Based on these numbers, which one would you take?

Alpha Delivered!

• Today marked CNBC's Delivering Alpha Conference where we got to see Jim Crammer interview the president's chief economic advisor Larry Kudlow. The FANG erupted up and came down quickly before finding footing and moving higher. They did end the day flat. The banks moved up nicely and Boeing opened up, came down hard and took off again to the upside. 
• I found Boeing has some great morning movement this past week similar to FANG. Boeing was $3 higher in the Premarket trading, fell on its face and took off when the Stochastic indicator was at the bottom. I will be looking forward to trading Boeing next week as Alphabet options will be too expensive for me to mess with. 
  
  
  
  
• Alphabet did a typical Wednesday where it opened up, traded down and moved higher by the afternoon. 
  
  
  
  

Bad Earning Report =Buying Opportunities

• Goldman Sachs had a great earnings report, but went down during Tuesday's trading session. Boeing started up  went down a little and back up a little. Home Depot and Best Buy were strong today as they were lead by positive news from Walmart joining forces with Microsoft to combat Amazon. The Fed Chairman gave a testament to Congress this morning where he was grilled about the treatment of the banks. 
• Netflix subscription miss caused their stock to get over sold in yesterday's after hours session. Alphabet (GOOGL) and Amazon were drug 20 points lower yesterday after the market close which clearly didn't make sense as they both moved up past their recently set all time highs by lunch time. Netflix went up taking back more than half of what it lost yesterday. I would not be surprised if it went down for the rest of the week.
• Pick a Call Option out of the money below the all time high for either Alphabet or Amazon at market open and you would have tripled your money if you had the guts to hold on until noon. Brings me to another learning lesson, but first the chart:
  
• LEARNING LESSON: When one of the FANG stocks has bad news, it will create a buying opportunity for the unrelated others. 

FANG is Struggling but not Dead!

• The Dow Jones was up today which was surprising given how so many people do not like how friendly President Trump was when meeting with Russian President Putin today. Boeing had a nice move upwards today and Amazon opened above it's all time high that was just set on Friday. It moved up sharply and at 3pm when Prime Day starts, they had website issues and it went down along with the rest of FANG. Facebook did hit a new high this morning also.
• Netflix was downgraded again today. They opened to the downside, moved up, but the big news was their 2nd quarter earnings report. It was announced after the market close on Monday and it went down over 50 points due to not increasing their user base as expected along with the expectations of new competition. 
• Alphabet (GOOGL) initially opened down and moved up sharply this morning. After it's peak around 10:20am it went down and further down. There was a nice move upwards in the last half hour after the big drop from Amazon. I do not like holding options over night because you have no control of your contracts in the after hours. Alphabet dropped down below 1180 in the first half hour after close and came up a little. There is no telling what is going to happen tomorrow with the FANG names as it could depend on Amazon's Prime Day success, what is said on the Netflix earnings conference call and if money leaves other FANG names to go into a more stable Alphabet. There were some opportunities using Call Options with GOOGL today that I will illustrate below: 
  
  
  
  
• Bank stocks lead by JP Morgan moved higher on Monday. It was strange how JP Morgan didn't move up after reporting earnings on Friday. It may move even higher on Tuesday if Goldman Sachs produces favorable numbers before the market opens on Tuesday.

Everything Good but Banks Today

• Today the big banks reported earnings before the market opened. Wells Fargo disappointed  Citigroup was lame and JP Morgan was held back by the others despite producing great numbers. Retail stocks were up lead by Home Depot and Best Buy. Boeing shot up, came down to where it started and ran up for the rest of the day. 
  
• The FANG stocks were good with the exception to Netflix like yesterday. Amazon and Alphabet (GOOGL) opened above their all time high that was set yesterday. Amazon was consistent going up for most of the day while Alphabet went down initially and made a turn at 10am to shoot higher. It took another turn about mid day that would cause it to go negative but turn around at 1200 and finished the day positive. There were some nice trades that you could have profited from if you followed the technical indicators as shown on the chart below.
  
• Amazon Prime Day is next week and I would expect to see Amazon and Alphabet go higher on Monday and Tuesday with a possible turn around on Wednesday afternoon. I think Netflix will reverse higher as it seems to do every time someone has something negative to say about them.