tastytrade
AMC Theatre Time Square NYC

Tesla Bounces After Gap, AMD Strikes a Meta Deal; S&P 500 Resistance

Nov 9, 2021

By: James Stanley

TALKING POINTS:

  • Mania-like moves continued to show in the US equities market with TSLA jumping after a large gap-down to start the week.
  • AMD caught a major bid after word spread that Facebook/Meta had chosen AMD for chips in their servers as they look to build out the metaverse.
  • The S&P 500 put in a second consecutive day of indecision at all-time-highs, is the index finally gearing up for a pullback after an aggressively bullish three-week run?

Markets had the weekend to digest another dovish FOMC outlay and that’s led to strength on the open that pretty much lasted throughout the session.

One of the more notable weekend events was, again, Elon Musk’s Twitter Feed. Amongst a host of interesting tweets, the Tesla CEO put out a poll asking whether he should sell 10% of his Tesla holdings, and he had multiple follow-up tweets saying that he would abide by the results of the poll. The majority said ‘yes,’ to the tune of 57.9% and on the this week’s open, the stock gapped down on the prospect of a major shareholder selling 10% of his stake.

1109_dfx1.png


The gap was about 7.26% from Friday’s close but almost immediately after the open the stock started to bounce and quickly clawed back a large chunk of that loss. The stock gained as much as 5.72% from that gapped-down low, a remarkable run by any stretch but especially so considering the context of Musk selling shares.

TESLA DAILY PRICE CHART

1109_dfx2.png


Chart prepared by James Stanley; TSLA on Tradingview


AMC: ARE APES PLANNING ANOTHER TRIP TO THE MOON?

There’s been some unusual options activity in AMC of recent to go along with bullish price action. Earlier today the word was making rounds that there was a $225k purchase of January calls at a 145 strike, which is more than 2x the all-time-high in the stock. While the fundamentals make such a price justification difficult, there is still an impressive short outlay on the stock and, as we saw earlier this year, short squeezes can create sharp bullish moves and the gamma hedging required from such options activity can continue to provide a bullish catalyst in the stock.

AMC DAILY PRICE CHART

1109_dfx3.png


Chart prepared by James Stanley; AMC on Tradingview


AMD JUMPS ON META DEAL

Facebook changed their name to Meta as part of a broader shift into virtual reality and the ‘metaverse’ that they intend to build. Today it was announced that Meta/Facebook had selected AMD to supply chips for their servers, providing another hit to Intel which lost a massive amount of business to Apple last year when they unveiled their own chip.

AMD spiked higher on the news to trade at another fresh all-time-high.

AMD WEEKLY PRICE CHART

1109_dfx4.png


Chart prepared by James Stanley; AMD on Tradingview


S&P HOLDS FRIDAY RESISTANCE

The S&P 500 initially gapped down to start this week’s trade but that gap didn’t last for long as buyers pushed prices back up towards prior resistance.

At this stage, the move is built-in and frothy but devoid of a bearish trigger, setting up for reversal could be a challenge. On the driver side of the argument, tomorrow brings PPI out of the United States and Wednesday brings inflation. CPI is expected to print at 5.8% but if this surprises and touches at 6% or more, there might be a quick jolt of fear that could compel a pullback if prices have started to pullback ahead of that.

As looked at in this week’s forecast on equities, triggering fresh bullish exposure at current levels could remain a daunting prospect until some nearby support structure develops.

From a technical point of view, this was the second consecutive daily close of a spinning top near resistance. This may be pointing at pullback potential but perhaps more pointedly, this highlights the risk of chasing at the current stretched level. Just ahead on the chart is the 161.8% extension of the September-October pullback, further highlighting near-term pullback potential in the index.

S&P 500 DAILY PRICE CHART

1109_dfx5.png


Chart prepared by James Stanley; S&P 500 on Tradingview

Written by James Stanley, Senior Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX



Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Related Posts

tastytrade content is provided solely by tastytrade, Inc. (“tastytrade”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. tastytrade, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastytrade is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. tastytrade is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options, futures and futures options are not suitable for all investors. Prior to trading securities products, please read the Characteristics and Risks of Standardized Options and the Risk Disclosure for Futures and Options found on tastyworks.com.

tastyworks, Inc. ("tastyworks") is a registered broker-dealer and member of FINRA, NFA and SIPC. tastyworks offers self-directed brokerage accounts to its customers. tastyworks does not give financial or trading advice nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastyworks’ systems, services or products. tastyworks is a wholly owned subsidiary of tastytrade, Inc (“tastytrade”). tastytrade is a trademark/servicemark owned by tastytrade.

Quiet Foundation, Inc. (“Quiet Foundation”) is a wholly-owned subsidiary of tastytrade The information on quietfoundation.com is intended for U.S. residents only. All investing involves the risk of loss. Past performance is not a guarantee of future results. Quiet Foundation does not make suitability determinations, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of Quiet Foundation’s systems, services or products.

Small Exchange, Inc. is a Designated Contract Market registered with the U.S. Commodity Futures Trading Commission. The information on this site should be considered general information and not in any case as a recommendation or advice concerning investment decisions. The reader itself is responsible for the risks associated with an investment decision based on the information stated in this material in light of his or her specific circumstances. The information on this website is for informational purposes only, and does not contend to address the financial objectives, situation, or specific needs of any individual investor. Trading in derivatives and other financial instruments involves risk, please read the Risk Disclosure Statement for Futures and Options. tastytrade is an investor in Small Exchange, Inc.

© copyright 2013 – 2021 tastytrade. All Rights Reserved. Applicable portions of the Terms of use on tastytrade.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastytrade’s podcasts as necessary to view for personal use.