Pre-Market Brief; May 10th

What to Watch as Wix, Snap, and NetEase Report

Trading Watchlist

Pretty light watchlist for the day as I am still looking for earnings season to wrap up before repositioning.

• Apple: This is the weekly chart. Ultimately, I see Apple continuing to press into the channel high and I will be watching closely as it does. Up nearly 40% on the year it may be an opportunity for traders to take some money off the table. If IV Rank can get above 45% I’ll most likely sell calls.

• Amazon: Strong resistance at $960. I don’t think Amazon will have enough buying strength to break through a trendline, channel, and fib resistance. A rising wedge is forming and I will look to buy a put spread on the break of the wedge.
• Snap Inc: Earnings Watch
• Sodastream: Earnings Watch

• Tesla: Still a very strong stock. The flush it had last week was an opportunity for suffering shorts to cover with recouperated losses and for lagging buyers to get in on the pullback. Given that Tesla broke the .786 retracement there is a high probability that the stock will break above $328 and head for the channel high. Also the stock had pretty strong volume on the day.

• UUP: Dollar Index: Possible completion of Wave 4 correction. Jumped into this trade slightly early after seeing this unusual option activity.

• Wix.com: Earnings Watch

Notable Earnings

• Wix.com ($WIX). Expected to report a loss of .24c-.7c/share. The options markets are implying a $10 move, or 14%, which is quite significant. Wix.com is up over 66% YTD and down 10% on the month, which could be due to profit taking. An impressive report here may present a good entry point. Here is a look at the May 9th large option activity. The largest trade is risking $67,000 to bet that $WIX will be below 64.20 by Jun 16th.

• SNAP Inc ($SNAP). Expected to report a loss of .37c-.12c/share. Implied move of $3, or 13%. Snapchat’s IPO valued the company at $24 billion and investors are likely holding high expectations. Will advertising revenue show continued growth or will the unprofitable company worry investors based on valuation? There was a large bearish option trade On May 5th. 17,950 of the May $21.50 Puts were purchased for .90, a $1.6 million dollar bet that Snap will be below $20.60 by May 19th.
• Sodastream ($SODA). Expected to report earnings of .37c-.52c/share. Implied move of 7.5%. Sodastram is up 43% YTD and still trading near all-time highs; any less than a perfect report here and I would expect to see profit taking. On May 9th 776 of the 12May 56 puts traded against open interest of 58. 368 of those puts were bought in two trades for an average cost of 207.5. This trade is risking $75,000 to see $SODA below $53.35 by May 12th.

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