This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.
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Apple and The Suppliers
At first, there was no demand; now there is too much demand. This is why you just have to love the stock market. According to reports, Apple ($AAPL) iPhone X pre-orders could hit 50 million. The result, Apple’s stock surged over 2 percent hitting a new all-time high. It wasn’t just Apple; those Apple suppliers got a boost too, Skyworks ($SWKS), Broadcom ($AVGO), and Qrovo ($QRVO) with all three jumping by more than 3 percent.
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Unfortunately, this what makes investing so hard, rumors fly around, and stock move on a whim, but until verified it just a tale. Just look at some of the volatility in these stocks over the past few weeks.
Skyworks is now basically kissing it’s all-time and likely to break out. It is due to report results on November 3, after Apple.
Broadcom is the same boat as Skyworks, and the chart looks pretty much the same, recently. Broadcom likely won’t report till sometime in December.
Facebook consensus estimates are calling for the company to report that third-quarter revenue grew by 40 percent since last year, to $9.844 billion, while EPS is expected to have increased 17.5 percent to $1.28. The important measurement for Facebook, the number of active users, and average revenue per user. The November 17, long straddle options strategy is pricing a move of 6 percent for Facebook, based on the cost $10 to buy one call and one put.
The chart looks very strong as well, with the stock breaking out on Friday. Could strong result be enough to carry Facebook to $200? Perhaps.
Surprisingly or not, options in Tesla are pricing in about 9.5 percent in the shares of the stock, using the November 17 long straddle. Wall Street is expecting revenue for the third quarter of $2.928 billion, and loss of $2.81. Of course, cash burn will be of the most significant importance as well, Tesla had cash and equivalents of nearly $3.0 billion. Which for any typical company is a lot, but for Tesla, one never knows. Capex has now gone expotential.
Tesla’s stock continues to hug the 200 day moving average, which has to be encouraging for the bulls.
For now, the biotech group as measured by Nasdaq Biotech ETF ($IBB) looks to have found a short-term bottom. We are going to want to see the ETF retake $322.
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Michael Kramer and the clients of Mott Capital own shares of TSLA, SWKS
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future.