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☕ Should you be worried about CrowdStrike?

Jul 30, 2024

Good morning! 👋

The S&P and Nasdaq both closed higher on Monday as the busiest week of this earning season got underway. Both indices are up slightly again this morning but may well be mixed by the time you read this.

Here’s my playbook.

1 – Apple AI used Google chips to pre-train??!!

Apple released its newest AI to developers yesterday and there are all kinds of game-changers in the works, many of which I highlighted to the OBA Family in yesterday’s update.

What I find most interesting – downright astonishing, actually – is that the company apparently pre-trained on Google designed chips if a Reuters report suggesting as much is correct. (Read)

My guess is that this’ll be good for a few bucks with GOOG short-term.

Longer term, I still have my doubts.

Apple is developing its own chips and the company has a history of using a variety of platforms to cross-test new products.

I don’t think we know the whole story yet and I sure as heck don’t believe that this means it's time to ditch Nvidia, a line of thinking making the rounds this morning amongst the clickbait crowd. 🤦‍♂️

2 – Delta lawyers up

Delta has hired prominent airline lawyer, David Boies, presumably to seek damages from both Microsoft and CrowdStrike for its half-a-billion-dollar stumble recently. (Read)

I wish I could say I was surprised.

What Delta should be doing is looking inward and asking why its own resiliency efforts weren’t up to speed. Other companies simply rolled back or undid the updates in minutes.

Sadly, Delta will probably get its day in court and, once again, the concept of personal responsibility will get thrown out with the bathwater. But, I’ll let myself out now.

Meanwhile and in keeping with my favorite maxim...

Chaos creates opportunity.

CrowdStrike shares are down 8% to $237 as I type.

Excellent!

Selling a few cash-secured puts is super appealing under the circumstances.

Keith’s Investing Tip: Many people react to the headlines but what they should be doing is figuring out how to use the situation to their advantage. This kind of shenaniganry is tailor-made for savvy investors and traders alike!

Here’s an old Jim Cramer video that highlights the basics of price manipulation... and it should prompt an “a-ha” moment given what’s happening. (Watch)

3 – A Microsoft earnings trade idea

Microsoft reports this afternoon.

I think the results will be fabulous at a time when upside volatility is cheaper than it’s been in a while. That said, traders seem to be looking for any excuse to clean out the weak money.

Here’s a trade idea that could work nicely if that’s the game.

I expect traders try to break $420 which seems to be the bottom side of 9AUG24 $420/$425 put spreads based on open interest concentrated at those levels.

If that happens, I suggest buying a 16AUG24 $435 call which may be trading at $5-$6 or roughly half of where it’s trading as I look at my screens now.

Do NOT attempt the trade if the price doesn’t drop. You’ll want to wait for what my grandfather called the “Sunday Pitch” which is how he referred to the one pitch you knew you could hit over the fences. Or, another turn at bat.

Plan on a quick exit using whatever profit levels make sense given your risk tolerance, circumstances, and situation (none of which I know).

Batter up!

Note: Please do NOT attempt this trade if you have no idea what I am talking about or lack the requisite options experience. As always, this is a speculative trade for traders. If you’re an investor, continue to invest in Microsoft, preferably using tactics like those we discuss frequently in One Bar Ahead®. Simple as that.

4 – Drug day

Merck, Pfizer, and P&G all stand to capture huge profits at the intersection of two massive themes unfolding right in front of our eyes... AI and customizable medicine.

I hope you’ve got this covered – and if you are a member of the OBA Family, you do.

If not, the window is closing.

It is only a matter of time before one of ‘em “solves” cancer, Parkinsons and a dozen other diseases that currently plague humanity.

Imagine what happens to their stock!

I’ve got my fav and trust you do, too. 😊

5 – Credit counseling demand soars

Demand for credit counseling services has skyrocketed according to Money Management International. New clients are apparently now carrying an average debt balance of $28,000 each. (Read)

I don’t believe that this will negatively impact the likes of Visa, Mastercard and other plastic money providers but I do see opportunity for companies like Enova (a payday and line of credit lender) as well as OneMain Holdings (which offers insurance and lending to customers that are otherwise credit challenged).

Hmmm.