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Twitter and AMD Options Stand Out, Is There A Double Top In Biotech?
The stock market overall had another dull day, with the S&P 500 down less than 10 bps, closing at 2,747. Like I had mentioned yesterday, the S&P managed to hang around support at 2,746. Again, there is a chance we could try for 2,740, but my expectations continue to suggest higher equity price over the short-term.
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Yields
10-year treasury yield continue to head lower, and I think they head toward the 2.6 percent region.
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IBB
The NASDAQ Biotech ETF, $IBB, looks headed towards $111.50, where there is a steady level of support there. If that cracks, we have much lower to go, and it makes the downtrend more powerful.
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XBI
The XBI looks scary now, and move to $93.50 nears. But the formation of what appears to be double top is what worries me. The only question, where is the neckline in this mess? It is probably not $93.50, and that is good news. It looks to be in a range of $88 or $89, and break below that would confirm the double-top, and a move much lower.
Regeneron
Regeneron continued its downward move today after getting close to resistance around $351.
Biogen
Biogen continues to try to turn higher.
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AMD
There was a lot of activity again in AMD options with 142,000 put contracts trading at $10 strike price for April 20 expiration. According to data from Trade Alert, 52 percent of the volume occurred on the bid, and that would tell me someone was likely buying the puts, but we won’t know until open interest updates tomorrow. There was already open interest of 267k contracts. Meanwhile, the $11 puts also traded about 43,000 contracts, but again the open interest going into today was about 265k.
The chart is near a major breakdown, and should it fall through $11.20, it is likely to head towards $10.70, but it could be as much as $9.75
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Broadcom
Broadcom reported better than expected fiscal first-quarter revenue of $5.331 billion, ahead of estimates for 4.998 billion, while beating on EPS at $5.12 per share versus estimates of $5.06 according to thefly.com. The guidance for revenue of $5 billion for the fiscal second quarter is pretty much in line with expectations. To me, after the first look, there was nothing in this report that wasn’t as expected. I think the overall trend in Broadcom continues to stay favorable, with the stock continuing to rise.
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Twitter is close to a big breakout and a rise above $36.75, as I noted in an Investopedia article, sends shares much higher, perhaps to $46. The holder of January 2019 $37 calls, pared their position back yesterday, with the open interest being reduced to 89,000 contracts.  The calls trade at $6.25, and that makes the open contracts worth about $55 million. Whoa! To think it was about $66 million yesterday before they sold some of those calls.
I went over this in the premium video yesterday and showed the build-up in the open interest when I think the position was first purchased.
Again, it surprises me how slow this trader is in lowering the position given the massive gains. In the article I wrote yesterday, I noted the open interest jumped around the end of August, and the price of Twitter was much lower, like in the upper-teens, which means the options were likely bought for a very cheap premium.
It makes me think they see more gains for the stock price.
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That is it!
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Tags: #sp500 #biotech #biogen #regeneron #twitter #amd #broadcom Â
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Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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