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Tesla dropped 14% in one day as the rift between Donald Trump and Elon Musk heightened. Is that over for now? We also saw Robin Hood being snubbed from the S&P 500 and AMD showing a huge number of call options as well as an extremely optimal setup on AMD and a few other stocks here. There are some prime opportunities in the market as we head into inflation week with CPI and PPI coming out.
Let's get into it. So unless you were hiding under a rock, you saw last week that Tesla on Thursday dropped 14% as the feud between Elon Musk and Donald Trump was heating up. There are now reports that there has been some sort of truce, but things remain quiet for now. The reason for this drop was ironically the same reason that we saw Tesla pump after the inauguration and election.
It's because we figured that this this relationship between Elon Musk and Donald Trump would bode well for Elon Musk's companies as the government made it easier for him to release things such as Robo Taxi, FSD, etc. So, this feud couldn't come at a worse time. Now, this wasn't the biggest one-day drop for Tesla as Tesla has dropped 21% on September 8, 2020.
This was the day that they were snubbed from the S&P 500. This is going to be relevant in a second as we talk about Robin Hood. Now, the very next day, Tesla was up 10% and by the time December hit, it was up over a 100%. In this case, Tesla rose almost 4% the following day. And if this feud is perceived to be over, then I think that Tesla can continue its rally up until the robo taxi event.
The area in which we dropped to was, as a matter of fact, the golden pocket on the Fibonacci if we measure from the whole runup starting in midappril. and this area of consolidation here. This also looks like a potential power of three with consolidation manipulation into this area, but it's going to be in my opinion very tough to see Tesla break out to new highs without some sort of confirmation from market structure.
The thing that makes a play on Tesla risky here is the fact that the roboax event is up and coming very shortly. So, I don't know that Tesla can make the move to give us confirmation in order to take a long here. I think if you're trading Tesla, it really is from this point a gamble if you are going to trade the robo taxi event.
Now, if the feud with Trump and Musk is, as a matter of fact, cooled down and the Trump administration is not going to go over is not going to go after Tesla or any of Elon Musk's companies. and they're not going to get in the way of full self-driving and robo taxi regulation. Then if the event wows if the event in Austin wows the market, there could be runway after the event where beforehand it was potentially seen as a sell the news event.
However, this sell the news aspect could have been front ran and induced by the rift between Trump and Musk. Therefore, providing a runway for a potential rally if Tesla does, as a matter of fact, come out and satisfy the market's expectation or beat the market's expectation with regards to robo taxi.
My favorite play here is honestly to sell puts because put premiums are so nice since Tesla did drop 14% on one day and implied volatility is way up. As an example, right now you could sell the 225 puts expiring July 18th for around $500. If you get assigned, you'll be assigned 100 shares of Tesla at $220.
You can even go lower if you want to lower your risk. The 200 put is selling for $2.62 or $262. I don't favor buying calls here, although you could get lucky, but I honestly think selling puts here is the only optimal play besides a gamble. Now, in terms of the markets, it's a pretty quiet week until we get to Wednesday.
We have CPI on Wednesday along with core CPI, and then we have PPI on Thursday and we have consumer sentiment on Friday. We also have a 10-year bond auction on Wednesday and a 30-year bond auction on Thursday. And speaking of bonds, quietly last week, the Treasury bought back $10 billion of maturing debt.
This was debt to that was going to mature in 1 to2 years. They bought back $10 billion. What makes this interesting is this is the largest buyback ever conducted by the Treasury. So they are starting their own little quantitative easing program. This news comes as Trump is urging the Fed to cut interest rates by one full point.
Now obviously the Fed is not going to cooperate as they said as much. They said that they are not going to be political and as long as the jobs numbers are good. They are not going to cut rates and jobs numbers once again came in decent with the unemployment rate coming in at an expected 4.2% last week.
So the Fed is not going to cut. The Treasury is therefore taking matters into their own hands and it'll be very interesting to see whether the 10-year bond auction on Wednesday and the 30-year bond auction on Thursday are considered failed auctions or successful auctions. if they're considered failed auctions, expect yields to go through the roof and we will likely need some sort of Fed intervention because this is getting out of hand.
I do want to talk about the S&P 500 real real quick with the fact that we have so much red folder news this week. If you take a look at the S&P 500 and the NASDAQ, you could see that we still have that bearish divergence between the S&P 500 and the NASDAQ from that March high where the S&P 500 made a lower high and the NASDAQ made a higher high.
That divergence still exists and will continue to exist unless the S&P 500 on the ES futures chart goes above 6,5250. This level here, 6,5250. Unless the S&P 500 crosses above that, this bearish divergence will still remain. And remember, we can still revisit this gap, these gaps here between May 9th and May 12th.
So, my thesis is if we take out that high on ES at 6,5250, then we will likely see all-time highs before revisiting this in a later correction. If not, and we break market structure here, then we are heading for this gap and likely will be fueled by the data this week before getting back to all-time highs during the summer.
Right now, we are in a very tight range and we've been in this tight range for an entire month. Same goes for the NASDAQ. Speaking of ranges, I told you that IWM was going to break out of its range. This is the Russell 2000. Go back and watch my last video. inverse head and shoulders. And more importantly, if we take a look, we had this range here that we broke out of and retested.
And on June 5th, I told you guys the best setup out of all the indices right now is IWM, the ETF that tracks the Russell 2000, lowrisk, highreward. And I gave you the setup here. You can see that on Friday, we bounced almost 2% on IWM. And this looks to be a very strong move or a very strong move is coming as we officially broke out of the inverse head and shoulders and I think we can tackle that 220 level in the immediate term on IWM.
Remember small caps were lagging the mega caps by a lot. And also remember that deregulation and spending bills tend to favor stocks that are in the Russell 2000 that are considered small caps that need that government help. So, I did go a little bit out on the IWM calls. Went out to August 15th. We are currently up 21% on these calls.
I'm personally going to hold them. There are a few people in the Discord who already took profits, but you could see the setup here. I actually typed it out on June 3rd, going for those 215 calls expiring August 15th. I wanted to buy myself a little bit of time to see if we can get that spending bill passed, which could take up until the July 4th time frame.
Now, I promise I'm going to talk about AMD and Hood in a second. But if you guys remember, I was saying that I cannot close that Uber position that I was actually down on because we were still at support and I was down on that Uber position. I ended up rolling it. I'm very forthright with you guys and transparent.
We were down on this position. You can see here on May 30th, I said I was rolling them to the July 18th 9090 calls and I got out of those on Friday for a 40% gain. Now, I still believe in Uber as a company and I still have the long-term shares, but with the fervor surrounding robo taxi, if Tesla has a successful robo taxi launch, that will definitely have an inverse sympathy play on companies like Uber, which are also entering the autonomous taxi space.
So, I can easily see that if that roll out from uh Tesla goes well, this could complete a potential head and shoulders and we could see some short-term correcting on Uber, which would kill those calls. And I don't want to hold short-term calls, especially if they're up 40% and I could take profit on them.
Now, Hood, Robin Hood rallied to an all-time high of $77.73 because there was an anticipation that it would join the S&P 500 last week. And on Friday after hours, the S&P came out and said they are not looking to make any changes. And you could see after hours that price dropped from 77 all the way down to $6944.
Recovered a little bit to 70 bucks. Is there an opportunity in Robin Hood? In my mind, 100% there is going to be an opportunity here. And I'll sh I'll share with you twice that this happened to Coinbase and to Tesla and what happened thereafter. Let's dive into it. So on March 10, 2025, there was an expectation that Coinbase would join the S&P 500.
And when it didn't, Coinbase dropped 18% in one day. Now, it continued to drop thereafter before bottoming out in the beginning of April. Then it was announced on May 12th that Coinbase would join the S&P 500. And you can see the following day, Coinbase rallied by 24%. And we went from a low of 142 to a high of 277 after sweeping this liquidity here.
And if we take a look at Tesla, like I said, the worst 1day drop was September 8th of 2020, it dropped 21%. This was the same day that Tesla was snubbed by the S&P 500. Then in November 18, 2020, it was announced that Tesla would be added to the S&P 500. Tesla rallied by 10% on that day and the total that it rallied thereafter was 101%.
Thereafter, it actually hit an all-time high of 414. So, it rallied much more thereafter, but immediately after getting added to the S&P 500, it rallied by 100%. There's no doubt in my mind that Robin Hood will make the S&P 500. This is not a snub based on Robin Hood's performance. The S&P 500 is just very slow to make changes.
And that expectation that Robin Hood would be added to the S&P 500 wasn't an announcement by S&P themselves. It was just speculation by the finance media and influencers in the space. And my favorite way to do research is on Grock or chat GBT. If I just type in does Hood meet the requirements for entrance into the S&P 500.
So in terms of market cap, it meets the requirement because it's above the $20.5 billion market cap threshold. In terms of profitability, it meets the requirement. In terms of liquidity, it meets the requirement. And in terms of doicile, it meets the requirement because it's headquartered in Menllo Park, which is a US-based doicile.
In terms of financial viability, it meets the requirement because it demonstrated financial growth with a 50% year-over-year revenue increase. Sector representation meets requirement. You get the picture. it does meet the requirement for listing into the S&P 500. So, what I'm going to look for on Robin Hood is a technical setup.
And when it presents that technical setup, I will likely enter leaps on Robin Hood for the long term because, you know, it could take a few months before it gets into the S&P 500. But for sure, I think it will get in there and Robin Hood will eventually trade in the triple digits in my opinion. Now, AMD has a very similar technical setup to IWM.
The only difference is it hasn't yet really broken out of the inverse head and shoulders even though it does have one. You could see that it loves it really loves this area around 115. The 115 area on AMD has really been there since July 2023. It was resistance support and resistance resistance resistance.
Now we broke above the little bull flag even though the larger pattern here you can see is an inverse head and shoulders. We broke above and are retesting that area. You can make a case to buy AMD here. And as a matter of fact, I have AMD calls here that I will exit if we get below that 111 range. It does not yet have the same setup as IWM.
Now, from a fundamental perspective, it definitely is improving. I have hated on AMD in the past. It was more of a tongue-in-cheek joke. I do favor Nvidia as a stock if we're comparing them, right? and I have exposure in Nvidia and I have exposure in SOXX and SOXL which are the semiconductor ETFs. One of them is leverage.
So I don't need more semiconductor exposure but I certainly favor AMD over Intel. I think AMD is the next big one. I don't think it is on the same level as Nvidia, which is how people talk about it. But you have to respect the free cash flow growth of plus 92%. You do have to respect the revenue growth of plus 36%.
The 57% increase in data center revenue, the 68% increase in client revenue, gaming revenue to me is irrelevant because that is a very small sector. And if we go to the options market, here's what is super interesting about AMD is it is very very heavily favored towards call gamma. The gamma exposure is very heavily favored on the call side.
What this means is if these levels start getting hit and start getting breached 115, 120, 125, especially this level here at 130 where you could see a huge amount of call gamma for the July 18th expiry. If that level gets hit, you could see an accelerated pace of up movement in the stock price. A lot of times movement in the stock price is fueled by the gamma exposure in the options price.
And just a little quick lesson for you. The reason that is is because when market makers sell calls to people who want to buy them, right? These are all uh buy calls, purchased calls. So if I want to purchase calls, a market maker has to sell those to me. They are short AMD calls, right? They don't want to be short AMD calls.
So they have to go out and buy the stock in order to balance out their exposure. the higher AMD's price goes, the more stock that they have to buy in order to balance out their huge short exposure because they sold everybody those calls. I hope that makes sense. That's how gamma walls work in a nutshell.
If you want to find out more, go to chatbt. So, I really do like as long as AMD holds this level, I really do like a position on AMD here. And as a bonus, I do think that Amazon, I told you guys this in the last video, Amazon has a very similar pattern. And I do think Amazon is also in line for a breakout to previous highs.
Anyway, traders, that is it for this video. I'm just enjoying a little bit of nature out in the East Coast. I was in New York City a few days ago. If you want access to all of my realtime alerts, all of these alerts, plus more, all of my long-term analysis, and you want to trade live with me every day.
I go live every morning and trade futures. Sometimes I day trade options, but I definitely swing trade options. Let me know down below what are your favorite setups. I'm going to go live for CPI, maybe even PPI. I'm going to be watching that level on the S&P 500 to see if that bearish divergence is still maintained.
If we break structure before that high is addressed, then I think that we are going to fill that gap between May 9th and May 12th. If we cross that level first before breaking structure, I think we're going to all-time highs first. There is that data that shows when May is ultra bullish. June tends to be ultra bullish as well.
Subscribe to the channel, hit that notification bell, stay safe out there, traders. Beasts.
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