TSM was the first big semiconductor to report this earnings season and yesterday I spotted a large trader that came in and sold short the February 20th $330 puts 13,000 times for $16.55, for a total credit of $21,515,000 ahead of their earnings report. These puts were in-the-money at the time of the trade, meaning they were looking for TSM to beat and continue higher which is exactly what they did. They crushed earnings estimates and the stock jumped as much as 7.4% today before pulling back to close up 4.44%. Those short $330 puts also got crushed and closed at about $9.25, so that trader is sitting on close to a $10,000,000 paper profit as the puts remain open.
With the TSM earnings beat, semiconductors were strong and tech had a nice snap back rally in the morning as it gapped up about 1.2%. But, the highs of the day were put in shortly after the open and the rally faded most of the day with QQQ closing up just 0.36%. SPY also had a big fade and only closed up 0.27% after being up as much as much as 0.7% at the highs. IWM again was the big winner as it finished up 0.88%, but it also gave back some gains as it was up around 1.5% at the highs of the day. The VIX did give back some recent gains as well with today's rally as it closed down 5.4%.
Looking at levels for tomorrow, IWM got near its primary daily uptrend resistance this morning that I mentioned in yesterday's update ($267.45). It put in a high of $267.05 before pulling back to close at $265.51. It did break through one of its prior uptrend resistances, making that trend invalid now. So, now there are just 2 channels that it's trading in. The first support level to watch tomorrow will be at about $265 (purple) while the next support would be at about $263.15 from its primary (white) uptrend if we do get a bit of a pullback. Resistances on the other hand will be at about $268.85, also from its primary uptrend, followed by $270.40 from its prior uptrend.
For QQQ I'm actually going to be looking at NDX (Nasdaq 100 index) for now as there's an issue with the charts with a misprint intraday for QQQ. So yesterday it broke through its prior uptrend support which still started a new uptrend for it. And then this morning it gapped up above its prior (purple) uptrend on the back of the TSM report. It did get an early retest and it held it briefly, but it ended up breaking down through it later in the afternoon. However, that trend is still valid for now. So the first resistance to watch for tomorrow will be that same prior (purple) uptrend which is at about 25,735. If it does break or gap above it again, then the next resistance from its primary trend (white) will be at about 25,920. Meanwhile support, also from its primary uptrend, would be at about 25,300 on a continued pullback.
Lastly for SPY, yesterday I noted that it put in a failed breakdown on the daily, and I was looking to get long on a pullback below $688 if we got it near the open. But unfortunately it gapped up too much and never got the retest to get long. So from yesterday's update, nothing changes as SPY did not break through any support or resistance levels and is now essentially trading in the middle of its primary range. So the first support to watch on a continued pullback would be at about $688.50 from its retest support (purple) while its primary uptrend will provide support at about $687.65. Meanwhile resistance from its primary uptrend will be at about $699.40.
And don't forget, we will be going into a 3 day weekend tomorrow with the markets being closed on Monday for Martin Luther King Jr. Day.
