Just like that META Platforms Inc, after a decent earnings report is cratering in the after markets despite the Revenue beat of $36.46Bn and EPS of $4.71 exp. $4.30.
But the big deal was the, full-year capital expenditures which was expected to be $35-$40 billion, from prior range of $30-$37 billion, the Zuck continues to plow money into the Metaverse a gamble apparently that many investors did not receive very well.
However we don’t take the excuses of the earnings to hit this, rather we believe the market has gotten way ahead of itself and this move was long overdue. META is -$74.65 or 15.13% in after market trading:
We honestly don’t have any real support until $362 with the Fibs so catching this one all the way down will not be fun:
Ok we liked the bounce in the equities thus far this week and its what we kinda expected. The markets washed out some of the oversold hangover and its now our base case the markets can resume their slide. Obviously META is helping the bears here but we have more market data tomorrow that could continue to push markets, most notably GDP:
As far as today’s settlements we are providing the last 3 days of data here today:
As far as our Magnelibra Futures Model Tracker there were some changes today, so please if you are following along our tracker make note of the positioning in our sentiment as of end of trading today:
Finally the MEGA8s, the hedge for this week is the QQQ ETF 423 Call:
Ok that is it for this brief note, we saw Biden’s proposal to raise the capital gains tax, well rest assure the equity markets won’t like that one bit, but considering the odds of him being president continue to falter, guess nobody will have to worry about that! No matter what though, the US Govt will have to figure out a way to continue to issue debt at the tune of $1T every 100 days, from our perspective, this is the main reason the FOMC will be forced to cut rates in the near future. We aren’t there yet but we are getting close. Long time Magnelibra listeners and readers know we are awaiting a negative non farm payrolls print…once that occurs the rate cuts won’t be far behind.
We have Microsoft and Alphabet up tomorrow in regards to post close earnings, let’s take a look at Fridays options to see what is going on there. The MSFT options straddle using the 410 strike is priced at $18.50, this is indicative of an 4.5% move. There is some chunky buying in the puts for Friday expiry in the 375, 365 and 332 area in MSFT today. 20% move would get it down to 332 and that would be very interesting!
As far as Alphabet the 160 strike straddle is around $9 indicating a 5.6% move. $153 area seems like the market maker sweet spot. Let’s see how these shake out, but the tilt seems to us is that retail is still willing to take some punters here on the call side, yes we know equities are always bull jaded, but with the signals as strong for a market drop to continue, we can’t help but think a real down move as obvious as it is to us, may not be so obvious to the many! Till next time…