The Daily Breakdown sizes up the week, as stocks start off under pressure, as Tesla gears up for earnings, and with oil on the rise.
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What’s Happening?
Geopolitical headlines pressured sentiment over the weekend, weighing on stocks while sending oil and the USO ETF higher by about 6% this morning. The S&P 500 (SPY, VOO) and the Nasdaq 100 (QQQ) are lower by about 0.5%, with the latter’s 13-day, 16.2% winning streak now at risk of ending.
👀 S&P 500 Spotlight
Earnings season is underway, with several key names in focus this week, including UnitedHealth, General Electric, Boeing, ServiceNow, Lockheed Martin, Intel, and Procter & Gamble. The biggest name on the list is Tesla, which carries a roughly $1.3 trillion market cap and reports on Wednesday. Last week, TSLA snapped an eight-week losing streak with a 14.8% rally.
⚡ Crypto Corner
Bitcoin was in focus over the weekend as it swung alongside the conflicting Strait of Hormuz headlines. Even so, BTC held above the key $74,000 level, giving bulls hope that this constructive technical action can help support improving momentum. On Friday, Ethereum hit its highest level since Feb. 1 as it cautiously inches higher.
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The Setup — CME Group
CME Group operates major derivatives exchanges where people and institutions trade futures and options tied to assets like stock indexes, commodities, and cryptocurrencies. The company generally benefits from higher trading volume and higher volatility, because both tend to drive more futures and options activity across its exchanges.
CME stock is pulling back the $285 to $290 area, with the 200-day moving average just below near $280. Bulls are hoping this zone — which was previous resistance — can act as current support, a development we discussed in this year’s Technical Analysis Bootcamp. If support fails, bearish momentum could accelerate.
Options
As of April 17th, the options with the highest open interest for CME stock — meaning the contracts with the largest open positions in the options market — were the May $280 puts, followed by the June $330 calls.
Investors who are bullish could consider calls or call spreads as one way to speculate on further upside, while bearish investors could consider puts or put spreads to speculate on a further move to the downside. For options traders, it may be advantageous to have adequate time until the option’s expiration.
To learn more about options, consider visiting the eToro Academy.
What Wall Street’s Watching
NFLX
Shares of Netflix sank almost 10% on Friday following a disappointing Q1 update. While the company beat earnings and revenue estimates, co-founder and chairman Reed Hastings announced he would exit the board in June when his term expires. Further, the company’s Q2 outlook was below Wall Street’s expectations. Dig into the fundamentals for NFLX.
UAL
United Airlines helped lead a rebound for travel stocks on Friday, gaining more than 7% on the day. It was joined by others such as Royal Caribbean, Carnival Cruise, and Southwest Airlines. United Airlines will be in focus when it reports earnings on Tuesday after the close. Follow the news for UAL.
XLK
Tech was the best-performing sector last week, with the XLK ETF rising more than 8% and hitting new all-time highs. The ETF has now rallied in three straight weeks and has gained more than 22% from the March low. Check out the chart for XLK.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.
