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Let's take a closer look at the chips and process equipment in this field in our technology spotlight. With me is Daniel Shay, Vice President of Simplified Options Trading. I'm glad you're here. So, I just read about some big laggards, right? With these big sales, all double digits, 17, 20%. This doesn't seem to be anything unusual for the group in general.
What do you think about this? Why the sale? Was he justified? Is this the right step ? 15% off sale? What is happening? Well, you know, I think the moves this year have been extremely exaggerated, and a lot of them are earnings-related. I mean, there was so much excitement with MU in particular before the earnings release, and I know I, for one, had a great time trading long on the trading floor waiting for the earnings release .
But after that earnings report, we saw almost no movement in the stock. And so, I think the expectations were very high, and after that event, it seemed to me that that's when the sell-off started. So, I think the expectations in this environment are very high, and that's why we're seeing a significant decline in these names .
Yeah, and I want to go into some specific names, but I think of a few things that caused that as well, right? Anthropic's valuation may be lower than people thought. Hmm, CXMT may be creating some competition for the group in Asia. Hmm, also, you know, will the stakes be higher? This is another area.
There are several storylines that affect the group as a whole, and that call into question the ROI and return on capital, if the capital expenditure is perhaps simply too high. Hmm, debt concerns. Yes, that's right. And from a technical perspective, sales beget more sales. And so when you first see pullbacks, I usually look for a pullback from the historical highs to about the 21st EMA, the 34th EMA on the daily chart.
But once we reach 50 simples, that is a critical support zone. And if and when we get a breakout of this level with high volume, that's when I move from buying on the dip to short selling in the short term. And if you look at SMH on the daily chart, we had this breakout with high volume a few days ago.
And with memory actions, this happened before. So when you see these critical support breakouts with these negative news announcements, selling breeds more selling until we eventually find support in the market. Let's talk about a name like Broadcom, for example. You said it's one of your favorite names for the long term, and you also like to trade it before earnings release .
So tell me about the current situation regarding a name like Broadcom. So Broadcom is a great example of one of these stocks that has performed well ahead of its earnings release because we have high expectations and high expectations. And this trading, especially in the options market, has worked very well quarter after quarter for many years.
But I've noticed that over the past three quarters, we've seen a situation where stocks peaked around the time the earnings report was released. Stocks rise before the earnings report is released, and then when the report comes out , it's simply not enough to push the stock higher. So at this point, we've had the last three earnings reports where we've seen this pullback after the report was released.
And as a result, we also had critical support breakouts on both the daily and weekly charts. So, at the moment, Broadcom is below the support level on the daily chart, which is not very favorable for the bulls. However, on the long-term weekly chart, we still have an uptrend. So I'm considering this long-term plan.
I am watching the long-term consolidation and weekly pullback to see if I can buy the stock at the 50-day simple moving average on this weekly chart. Good. And we will hear from the company in early November. Let's turn our attention to AMD. We saw a rapid rollback. Are you watching a 50- day buying opportunity?
So, AMD is now one of the semi-industrial companies that is still holding on to this critical zone, and it is currently balancing on the edge. So I'm looking for buyers who will come at this critical level. As of now, it could still be a buy on profit as it holds in this zone . However, I will change my position if it breaks this zone on high volume, especially if we have two trading days below the zone.
So, I think AMD, even despite the quick pullback, is still holding within these support zones on this daily chart. And of course, I still like it for long-term investment. So, I consider this company as a buy option as it is holding within the support zone. Well , let's talk about next week. I mean, you know, we'll start hearing from Mag 7, but let's, uh, look at a name that seems to be so widely known and seems to be staying in this space, which is Nvidia.
What do you think about Nvidia's trade here? The technical levels you are observing. I'm going to see where she is now. This is $ 215 below the high of $243 . What do you think? So, with Nvidia, Nvidia is entering the hot profit zone in the next trading session, which will be on Monday. And the earnings hot zone is the time period before earnings start to rise with this expectation before the earnings release .
It has now broken through several critical support zones. However, it is still above the 100 primes, which it is currently clinging to. So, if the stock can stay above that zone, then I would like to buy it before this earnings report is released, because historically it tends to rise before earnings reports are released, and having already hit an all-time high , it has pulled back.
Um, I think they're in a great position for me to sell put credit spreads, especially now that they've rolled back. Okay, what about Mag 7? I mentioned them. We talked a little about the change in content manager at Netflix. Ted Sarandos, co- CEO, talked about some slowdown. But, you know, we're thinking about Mag 7 stocks and some of the tech companies that we're looking at next week.
What do you think about next week? So I'm concerned about stocks reporting next week, mainly because Netflix and Tesla, in particular , have been weak on earnings over the past two years. And so, you know, on the one hand, I feel like the market is expecting their weakness because that's what we've seen historically.
So I don't think it would be a big shock if we saw any of the companies pull back. Netflix in particular is a stock I used my earnings kill trade on, and it's a stock that typically goes into real decline mode before the earnings report is released. So at the moment I don't have an optimistic view on any of them.
However, I will note that for Tesla in particular, I expect a big comeback. It just hasn't arrived yet. I know that when the Optimus robots eventually go on sale, the stock will eventually break above the $420 price point, but I just can't say I'm confident that will happen with this earnings report.
You also talked about Lam Research, where you said they're historically strong on winners, that's a name you're following as well, right? Yes, I also have this company in my long-term portfolio and I like the stock and it has been trading very well over the past few years. However, I will point out again that this is another company that has recently broken through a support level.
So it's a difficult situation when you're getting ready to release earnings reports for these companies that have pulled back so much because investors are nervous, and when growth slows or if there's any mention of any problems at all, people get nervous and sell stocks. So I like these promotions.
I personally don't sell them. They are in my long-term portfolio, but in the short term, due to support breakouts, they could be problematic. But they rose 26% last quarter after the earnings report was released. So we'll have to see if we get a positive reaction to these promotions. Daniel Shay, thank you. Vice President of Options, Simpler Trading. Daniel, thank you. Nice to see you.
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