The Big 3: MRVL, NFLX, META

welcome back to trading 360. I'm of course, Marley Kayden. It's time for the big three. We've got three stocks three charts and three trades for you. Rick Duquette taking us through the charts as always here to take us through the trades. Don Kaufman the co-founder of Theo Trade. Don always great to have you on. We've got a mixed picture on the board though. S&P has got a new record. Dow seeing a nice pop to the upside. ADP came in a little bit weak. How are you looking at things right now. Yeah. Let me allow me if you will, to option geek out on everybody for just a moment. With the upside move in markets over the last few trading sessions, we have actually seen the S, p x, specifically the shorter duration option chain invert. The call skew has inverted. Now, for those of you that don't necessarily speak option geek, understand the demand is so high to buy at the money and out of the money calls that the implied volatility has actually gone up with the marketplace going up. So if you will, you can measure this almost as like a crash to the to the upside. And the unwind of that inverted skew is going to bring some very short term violent volatility to this marketplace. This is not like an omen that, you know, we're necessarily going to crash. But look for short term, very erratic a disconnected broken moves as the hedge on this inverted skew unwinds. All right. So how does that come into play with your big three selections today? Are any of them potentially getting caught up in that volatility. Because you've got Marvell as your first pick. They've had a pretty significant pop over the last week or so as we've moved back into the semi trade. But they were really caught up in in the pullback. Look Marvell is a is a bear market rally to me at this particular point in time. And you're exactly right. It is caught up in the in the midst of this upmove. I mean Marvell has traded from what 330. It was topping out around 330, which we're going to see in a moment from Rick all the way down to 165. It's over a 50% decline. Then it gets this huge rally back, taking it to about 213 and change where it's trading right now. I think it's a great fade. And when I say fade, I mean I'm actually going to short if you will, into this most recent rally. But I'm going to do it with defined risk. And you know, I'm so transparent about that. Like I don't want to step in and just try to short actual stock in the midst of a rally like this, because I don't necessarily think I'm going to be able to catch a top or catch a bottom for that matter. But coming in with a defined risk option spread is the way to look at this and allow, if you will, Marvell, to come back into its most recent trend, which has clearly been to the downside. Again, over 50% decline from some of the recent highs this trade. I'm going to go all the way out to the OC 16th October already 16th. I'm going to buy the 175 puts and I'm going to sell the 165 puts against it. It's $10 wide put spread done for $3.10 debit. Look this trade we recently traded as you know well below this. So again I think this trade is is you know right in the zone of where we believe again when Marvell gets back into trend we'll head down to. All right Rick. So as we look here at Marvell what levels are standing out to you on this chart. There is an earnings event at the end of this month that does come into play with this trade. Sure. So Don mentioned 175 to 165 or so. 164 right about here is where I had highlighted. So that was a notable supportive area at which we saw kind of a double bottom type of activity. So if you were to be looking for a place for the short strike on that long put spread, that stands out as one possible candidate. We also have a gap here. 194 207 represents where we had an upside gap recently. Recent highs as well include 223, 232 and here 252. We did have an intraday fluctuation below that level, but for the most part that's where we saw price stop and start. The old support became new resistance. So if we do look at our price activity today we had our gap up. So now we are on pace for a harami type candle where our smaller red candle is completely contained within the real body of our previous larger green candle, a sign of indecision of stall in the market here. So a breakout would be important either beyond that 223 level or beyond that 207 level that represents yesterday's respective high and low. So if we were to think about our next set of indicators here, our moving averages, we can see that we have our five day, 21 day and 63 day EMAs all converging together in the low 200 or so, 200 to 210 roughly. So that gives us a confluence point to watch out for, for either. If you had more of a bearish outlook, a breakdown point, or as a supportive area, if you were more bullish. So we can also see that RSI has improved somewhat here. We have been rallying making new relative highs. And we've also crossed above that 50 mid line. That separates bearish from bullish momentum. Finally when we look at our volume profile study a small node has developed here between about 190 to 210. Roughly another one here centered around 165 or so. Things are much thinner to the upside. We can see a more of a pocket of activity here between about 275 to 310. Not really a clear standout node in that area though. All right Marvell today down about one and a third percent at 21567 after a nice move to the upside yesterday. Now you brought us a bull sandwich today. So we're going to get to the bull meat here with Netflix. And no argument that there is a downtrend on this chart on. Yeah. You know it's it's kind of ironic because here's a downtrend. But I think Netflix has some legs to the upside here albeit minimally. You know yes my trade on Netflix is bullish. But it's only going to be bullish to the point where I think Netflix can actually scrape back and get above 80. After that. I think really all bets are off here. This this is one that it's definitely caught up in a downtrend. There's no question about it. But it started to have a little bit of a rally back. That rally back could fade. But again I think that we have legs till about 80. And that's exactly the way I'm going to trade it. So this one I'm going to come a little shorter duration. That's because I think that the move is here. And now this one I'm going to the Sep 18. Right. So just over a month out Sep 18 I'm going to buy the 77 calls, buying the 77 calls and selling the 80 calls against it. So it's a very tight $3 wide spread done for a 90 cent debit. And the only reason I'm using a $3 wide spread is because quite frankly, I don't see the rally anything beyond 80 at this point as being necessarily sustainable. So get to 80 pulls back. But it's definitely not, not out of the woods just yet. Longer term inside of Netflix. You know, it could have gone either way on this one, but I like these short term pops that I can I can hop on board. All right. So as you look at the technicals here, are you seeing a chance of us to get back up towards that 80 level. Well 78 to 80 is a level that I took note of as well. The reason why 78 being that that break even level for the trade. That's a gap level right here. So roughly 78 to 80 represents, that gap area here. You can also see that that 78 mark was resistance down the road further. So we haven't quite cracked above that level yet. So that stands out as an area to watch going forward. Another gap here around 73 recent lows and subsequent highs. Then lows once again as well near 71. We did also have our 52 week lows here 6508. Quite a drop from those old. Highs near 126. We're down 41% 42% from that point. So a pretty rough road for Netflix traders. Here. We can see that our upward trend line is in play for now as well. We have broken out to the upside from our downward channel type shape here. That began after our last earnings event connecting many of these subsequent highs. So upside breakout from our pattern has taken place here. We seem to also be holding on to our short term trend line in this case. Now we have a confluence of our five day and 21 day EMAs. Those come together around the 73 level. They also are in confluence with our white trend line. So this again presents a notable supportive confluence here in that area. Meanwhile, our gold 63 day EMA representing one quarter is just above near 78. RSI in this case has also crossed above that 50 mid line. So more of a bullish tilt to this momentum indicator as well. Finally when we look at volume profile here we are in the midst of this node area between roughly 72 to 78 or so. Another smaller node here around 68 or so. And then another cluster of activity between 81 to 84. Those are the standout areas for potential congestion or support or resistance. All right. But Netflix today higher up a half a percent at 7395 right now. Don your last pick here is meta one of the laggards in the mag seven. It did see a nice pop off of earnings. But still a lot of concerns about that CapEx number still down year to date. Not as much as Tesla but second worst performer in the mag seven. So how are you looking at meta right now. Yeah. Here's one. We're once again I'm going to fade this with a nice defined risk put spread. But let's talk a little bit about some of the underlying, first of all, I am looking for a target on here to the downside of about 520 at that point. Look, my trade is going to be fully profitable. Nevertheless, that 520, as you're going to see in the chart in just a few moments here, is, is imperative that probably be retested in the near term. That just happened to be kind of a key place where we bounced a multitude of times in the past. But I would look for us again, as I said, to retest that. You know, you were just mentioning a moment ago, Marley, about some of the CapEx spending. I mean, meta, we've kind of forgotten about this. It was just over a year ago. They hired like the dream team of developers to build out their AI. We haven't heard anything about it. I mean, we're talking like $1 billion plus in salary. I mean, most of these, these dev people were actually making more than like NFL, like starting quarterbacks. And again, we've heard absolutely nothing. They're not even on the radar screen right now with, with any new AI products out there. If you look at some of the, some of the recent tests that's being done. So meta has gone a little bit dormant on this continues to spend. And in the near term, though, I think that it's going to continue to subside to the downside again, down 9% on a year to date basis. And this most recent kind of just the last few days, this rally back in the entire marketplace has actually given us an opportunity to short into meta at, at better prices. So in meta, I'm going to go again out to the OC 16 expirations, going all the way out to the October expiration, I'm going to be buying a 550 put, buying a 550 put selling the 540 put against it. Once again, a nice big $10 wide put spread done for a $3.25 debit. So what's your max risk? 325 the upside in here. Okay. You know, just shy of seven bucks. This is a it's a great risk reward if you believe that meta is probably going to retest some of those, those recent lows of 520. All right. So let's look here then at meta. Right now we're at 586. Rick. You can see the downward sloping line here that we're seeing. But as far as the technical setup, what are you seeing. Yes. Not a lot of progress on these major products. I don't think I'm being unfair. If I mention the metaverse, which was a gigantic flop, unfortunately for them, but 520 and 540 are levels that stand out to me. 520 being our 52 week lows that we came close to, we didn't quite retest them that, but also 540 here was a gap level. So we had a gap to the upside there. We retested it then further down the road. So that could be one area that we would find potential support if we were to move lower. Another gap here stands out between about 566 to 580. That was around where we had our recent relative lows here. After a sharp rally that we saw during the past trading week or so. Meanwhile to the upside, another gap here 614 to about 628. That 628 level roughly lines up with old highs and subsequent lows. 643 also stands out as well as another area of interest. When we advance our chart and think about our moving averages. In this case, more of a downward trajectory as what it reveals here. All our moving averages are reflecting that the faster ones are below the slower ones. Here they're mostly diverging apart from each other, with the exception of our five day EMA in dark blue, which we are approaching once again here, that comes in near about 582, 583 or so. We also seem to have failed to overtake our 21 day EMA and teal. That comes in right around 5.99 even even though we did have this upside breakout from our trendline, RSI exhibited a matching trend line. We have not cracked that 50 midline yet, so that remains a bit of a fly in the ointment for hopes of a bullish rally here. That would indicate a broader trend change. So now we can see that our point of control the heavy trading area here on our chart that's our thick red line 606 is where that one comes in. We haven't quite managed to crack above that one yet either. So that remains another layer to our resistance idea here that we're developing. 570 also is a smaller node as well as right here this very small area near about 535 or so. All right. I will never forget covering someone, buying a $40,000 fake NFT digital treasure trunk from Louis Vuitton in the metaverse, and having to figure out what a non-fungible token was to explain why someone would do that. But there is meta. There's my my memory of my blast of the past here. I think that was 2023 meta down about a third of a percent. Don, really appreciate you joining us for