Editors Note:

Thursday is the last burst of big cap tech earnings for Q4. Of all the big name tech stocks that reported after the bell on Wednesday, Facebook was the only one to gain in afterhours and that was after it crashed $10 in early trading. The conference call was sufficiently bullish to convince investors to come back into the market and cover their shorts. This rebound may not hold on Thursday. The rest of the big name techs, MSFT, PYPL, QCOM, SYMC, CHKP etc, all traded down in afterhours. EBAY was flirting with a positive close as I write this.

On Thursday AMZN, BABA and GOOGL report. Amazon is always a coin toss on whether Bezos elected to produce profit or not but Q4 is normally a good quarter. Will it be good enough to power it to another new high? The stock closed at $1,451 and a new high on Wednesday. It is up almost $300 for January.

With the market showing increasing volatility and the big cap tech earnings nearly over, I am going to recommend a QQQ put.

I am also profiling a put recommendation on Harley-Davidson. Weak earnings, weak guidance, higher costs, lower shipments. That should be a cloud for weeks to come.


No New Bullish Plays


QQQ - Powershares QQQ - ETF Profile

PowerShares QQQ, formerly known as QQQ or the NASDAQ- 100 Index Tracking Stock, is an exchange-traded fund based on the Nasdaq-100 Index. The Fund will, under most circumstances, consist of all of stocks in the Index. The Index includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization. The Fund and the Index are rebalanced quarterly and reconstituted annually. ETF description from Powershares.

The chart on the QQQ has shown several failures lately at the $170 level and the volatility is increasing. Rising volatility (strong reversals) is typically a sign of investor indecision see at market tops and bottoms.

If the tech sector decides to take profit from the nearly 10% gain in 2018, the drop could be significant. Uptrend support is around $162.

This is a speculative position on the potential for a post earnings depression decline over the next three weeks.

Buy March $166 put, currently $2.93, no initial stop loss.

28,060 were traded today. That is half the existing open interest.

HOG - Harley Davidson - Company Profile

Harley-Davidson, Inc. primarily manufactures and sells cruiser and touring motorcycles. The company operates through two segments, Motorcycles & Related Products, and Financial Services. The Motorcycles & Related Products segment designs, manufactures, and sells wholesale on-road Harley-Davidson motorcycles, as well as motorcycle parts, accessories, general merchandise, and related services. It offers motorcycle parts and accessories, such as replacement parts, and mechanical and cosmetic accessories; general merchandise, including MotorClothes apparel and riding gears; and various services to its independent dealers comprising motorcycle services, business management training programs, and customized dealer software packages. This segment also licenses the Harley-Davidson name and other trademarks. It sells its products to retail customers through a network of independent dealers, as well as ecommerce channels in the United States, Canada, Latin America, Europe, the Middle East, Africa, and the Asia-Pacific. The Financial Services segment provides wholesale and retail financing services; and insurance and insurance-related programs primarily to Harley-Davidson dealers and retail customers in the United States and Canada. This segment offers wholesale financial services, such as floorplan and open account financing of motorcycles, and motorcycle parts and accessories; and retail financing services, including installment lending for the purchase of new and used Harley-Davidson motorcycles. It also operates as an agent providing point-of-sale protection products, including motorcycle insurance, extended service contracts, credit protection, and motorcycle maintenance protection. Harley-Davidson, Inc. was founded in 1903 and is based in Milwaukee, Wisconsin. Company description from FinViz.com.

Harley-Davidson (HOG) reported earnings of 54 cents compared to estimates for 46 cents. Revenue of $1.05 billion beat estimates for $1.01 billion. These numbers were up from 27 cents and $933.0 million in the year ago quarter. That is where the good news ends. The company said it was going to incur consolidation costs of $170-$220 million and $75 million in capital costs over the next two years. The consolidation of plants would save them $65-$75 million annually after 2020.

The company said Q4 sales declined 9.6% year over year with sales down -11.1% in the USA. Industry sales were down -6.5%. Overall shipments by Harley in 2017 were the lowest in six years. The company said the customer base was getting older and younger customers were lukewarm to the brand. They lowered 2018 guidance for shipments of 231,000-236,000 motorcycles, down from actual shipments in 2017 of 241,498 and its prior 2018 forecast of 241,000-246,000. Shares fell 8% on the lowered guidance.

The outlook is negative. Higher costs, lower earnings, falling shipments. This should be a cloud over the stock for weeks to come.

Buy March $47.50 put, currently $1.89, initial stop loss $52.25.