i am coming to you live from the nasdaq markets site. the guys are getting ready behind me. while they're doing that, here is what is coming up. >> what is that? >> antidote. >> to what? >> the poison you just drank. >> investors were shocked by the drop in chinese stocks. we'll tell you which dow stock could be most vulnerable to the shanghai swoon. plus -- ♪ ♪ we're gonna bring you the power ♪ because there is one sector that is setting up for an electrifying trade, we'll shine a light on it and tell you how to profit. and -- which large cap tech stock is set for a big surge? >> please tell me. >> we will, jack, and we'll tell you how to make money too. the action starts now. ♪ making that move right now, baby ♪

we all know about the sell-off in chip stocks today. what we don't know is what it could mean for the broader tech rally going forward. let's get in the money and find out. dan, does this signal trouble ahead for tech? >> it definitely could. when you think about it, it's definitely not micron today. we saw the stock was down 18% after sentiment was amazingly poor. i don't think anyone thought there was going to be a beat there. but the drubbing that stock took today, i think you have to think of some of the other moves. oracle, here's a stock that had traded very well in a tight range for a couple of months here, and their guidance sent that stock down 10%. and then there others with the one, jbo which is a contract manufacturer, they make a lot of equipment for large oems, and that stock got drilled after its poor earnings. so when you think about what's going on here, it's across the pc and smartphone supply chain here. and there appear to be some problems. so to me i think you really have to be careful when you start to see the magnitudes of these sorts of sell-offs increasing over time as we head into q2 reporting season next month. i think you really have to be

cautious here. >> we saw all sorts of knockon effects not just in the chipmakers but across a lot of tech sectors. hewlett-packard got hit, adobe got hit, mike. >> first of all, hewlett-packard has been getting hit basically for be what, the last decade on pc sales. we're making this out like it's all a big surprise, but you know, the interesting thing is this is basically a slow motion train wreck that's been going on for quite some time. when i look at the whole space, there's really only one name that seems to be holding in on the pc side, and that's actually apple. guys that make this computer right here. because basically, all of these sales are going down. they are picking up a little bit of what's being lost. so when i take a look at the space, if i had to be in somewhere that's hardware related, makes machines like this one, that would be the name i'd have to be in. >> that was an ugly drop for micron. >> the thing is despite the sort of resilience of the sox index itself, marquee names have been churning for a while. qualcomm peaked a year ago, sandisk a year ago. micron, intel haven't made highs

since december. even as things like ahavingo and xpi have kept this going a little bit some of the heavier names -- >> you just mentioned avago, broadcom, intel, altera. $60 billion worth of m&a right there in the last two months. i feel like in a lot of ways that has actually kept tech afloat here. when you think about it, tech is the largest weighted sector in the s&p 500. and you mentioned apple. that's the largest weight in the s&p. it's the largest weight in the nasdaq. when you think of the nasdaq, it's got all these biotech stocks that have done very well too. to me underlying tech stocks, large cap tech stocks act very, very poorly, which brings us to intel. that's the one i really want to focus on because to me i think it has the potential -- the stock is down 14% on the year. i think it's incorporated a couple guide downs over the last two quarters here. we got one in january and got one in april and the stock has acted okay, but now really it's down -- it's approaching a very, very key technical support level. we have a chart right there. to me, listen, whether you like this stuff or not, this has the potential to be a textbook head

and shoulders top. that neckline is $30. that's the line in the sand there, people. if they miss and guide down on july 15 when they report their q2, this stock's breaking that way and it's probably going to go down toward 26. so i have a very simple trade here. this is a trade i actually put on a few weeks ago. but now that the stock has come back, the options are about the same level. i was literally just targeting that reporting date and looking at the july regular 30 puts today when the stock was 31. you could buy those for 45 cents. your break even is down about 4 1/2% at 29.55, between 29.55 and 30. you can lose that premium. but that is your max risk, 1 1/2% of the wrund lying stock price. and when you think of the magnitudes of some of these moves on the misses that seems like a relatively cheap way to play for a breakdown. >> what do you think, mike? >> this is one of the situations you point out 1 1/2% of the current stock price to buy a put strike that's less than a dollar out of the money. if this thing does start to move down, one of the things you're going to be able to do with this, especially if we see a

pickup in implied roll tivolati cost of options you could r08 this into a spread by a lower strike put. >> head and shoulders is exactly what it's called. that's the kind of reversal formation has been known for years. it's prototypical. and the result is -- >> easy to see. >> easy to see. you can see the shoulders, see the head. and that gap i bet is interesting to you from 28 back in june. so a gap fill would take us down there and then some with a little luck. >> no doubt about it. i can't put too fine a point on this. it seems that a lot of stocks in the nasdaq, specifically the large cap tech, act very, very poorly when the s&p is within a couple percent of the all-time highs. so if the market is going to roll at some point, it feels like technology is the place and there's a lot of money concentrated in things like apple and apple may continue to outperform but these other ones are showing signs of weakness under the hood. >> moving on, another big story today, the yield on the ten-year treasury continuing to rise, making a run at year-to-date highs. and that has weighed on utilities. but our chartmaster is sensing a

turning point in this relationship. >> we've had a big bump up in yields, but home builders and utilities are starting to shake that off a little bit. so what i thought we could do is take a look at the charts and try to figure this out together. we know the relationship sin verse but at some point a lot of it or at least most of it is priced in on an intermediate basis. i have a comparative chart, utilities versus ten-year yields. we know yields have gone from 1.6 to 2.5. utilities have dropped. reits have done the same thing if you look at iyr. longer-term picture, inverse correlation again, rates higher, interest rate sensitive stocks reits and utilities lower of course. but what we know is this is a five-year chart. we're up two. this is the down trend in yields, which is the same as the up trend in utilities. presumptively after you reach a difficult level or close to it you basically either back away yields or you back and fill. the reciprocal of that, the implication being, that we get a

bounce off our trend line in utilities over and over and over. and the presumption is we can get a little bit of a bounce here, 4% or 5% off of the xlu. so we like this long. one more chart. here's our trend line. here are the advances and the declines, down 20%, down 14, down 12, down 14, down 10, down 17. and it's all quite symmetrical. what we play for is the counter trend move back, off the line. we take a shot here at xlu. >> very interesting to see that relationship sort of break up a little bit. mike, do you agree, or is it too risky to be buying utilities in a period of rising ritz? >> it might toob risky to go out and buy the stocks but we might have an answer in just a second. the utilities, unlike bonds themselves, are actually kind of an inflation adjusted income-producing instrument. they're heavily regulated of course. that's one of the things that weighs on them a little bit. and actually because we've had very low rates and very low inflation, that meant that a lot of the things that the power companies sell, gas and power,

have been low, and that's actually been hurting them a little bit. but if we do see rates going up, if we do see economic growth, if we do see the prices of power and gas go up, that could actually benefit them. the nice thing about utilities here too is the fact that utilities because they are regulated and are very low volatility, the options premiums are exceptionally low. so to your point we don't need to sit here and really worry about whether or not rates are going to do that because we can risk very little money and all i'm looking to do is go out to september, buy the 42 calls which is the first strike out of the money and you can spend $1.05 for that risk a little over 12% to make a bullish bet 37 just like we were talking about with this other trade. if it does make a rally through that maybe you can spread this. >> do you like this? >> i do like it. here's the thing. we know that treasuries are the only true safe haven asset that exists and if the market was to get a little more volatile and we did have some sort of situation where u.s. equities started to sell off i think you're going to see investors move back toward treasuries. i'm not convinced that rates are going high so quickly. even if we're one and done in

the fall. here's a sector that really has ku78 full circle over the course of the last year. huge run-up to the end of the year. given it all back. i think some of the stocks with that 5% dividend yield now at 52-week lows, southern is one them, that maybe you can take a shot on and you know you have about a 5% buffer to the down side. >> one of the most powerful principles in markets. with rates moving up progressively utilities one of the best performing sector. it's priced in a lot. >> that's just today. >> a lost these names are trading below their historical valuations. as he pointed out that weakness has made them relatively cheap. by the way, even if you do see some small increases by the fed globally rates are not going to be on the influenced by the fed. the spread between boons and feds is not going to be great. that liquidity helps keep a lid on rates. >> utilities or home builders? i thought that was interesting. >> the initial pressure as rates quickly come off 9 bottom it's the first rate of change, utilities, reits, they all sunk but then they start to find their footing even as rates have gone higher.

>> we'll keep an eye on it. got a question send us a 2008 to @optionsaction. if it's nice we will consider leading it later in the show. for everything "options action" you can always check out our website, optionsaction.cnbc.com. we've got the hottest options news, videos, trades from all of our guys here throughout the week and also exclusive trades there. so check it out. here's what's coming up next. ♪ yep. that pretty much sums up the chinese stock market. and we'll tell you which dow stocks could fall in sympathy. and looking for a stock that's ready to join the rally? here's a hint. and we'll tell you how to trade it when we come back. here at td ameritrade, they work hard. wow, that was random. random? no it's all about understanding patterns like the mail guy at 3:12 every day or jerry, getting dumped every third tuesday. this happens every third tuesday. we have pattern recognition technology on any chart,

plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. for all the confidence you need. td ameritrade. you got this.

ahh... steve, other than making me move stuff, ces. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade. you got this.

we're just about halfway through the year, and some surprising names have been lagging the overall market. dom chu back at cnbc headquarters with more names for us. >> let's hit both sides of the coin. momentous week for that new tech world giant. we're talking of course about facebook, the biggest social network company out there. it passed the market cap of the world's largest reermt, walmart. that move kicked walmart out of the s&p 500's top ten companies by market value. among large cap tech companies apple and facebook real standouts to the up side. on a year-to-date basis apple's up 15%. afghanistan fbs's up 13%. that's a lot of firepower on the bullish side for large cap stocks and technology. but not all those large caps like you said have kept up. check out what's happening with semiconductor stocks like intel, down 15% so far this year. qualcomm down 13%. on the software side of things you've got oracle down 9%. large cap technology stocks that are lagging. then there's google. the second biggest stock in the

s&p. shares are positive but lagging behind some of those other tech giants. the class a voting shares up just 4% so far this year, still beating the s&p. the non-voting shares, the c class, just up around 1%. so google one of those stocks that's trying to find its footing here and trying to keep pace with some of those other large cap brethren out there. back over to you guys. >> thank you, dom. we're going to hone in on google. underperformance, it's caught the attention of our resident chart master carter who's already made his way over to the board. >> it's been literally frozen. so the opportunity if you're a short seller is that the resolution is down. if you're a buyer, up. we think it's up. so let's make our bets. a big sideways period. yes, you can see this quite clearly. but here's the trend line that's been in effect since essentially the stock came public. we're on this line, we're on this line. we're on this line. so here is our sideways. there's our trend line. now you make your bets. is the resolution up or down?

what we're keying in on here, i'm working backwards from the long term to the short term, is now overt last five years. here's our equilibrium again. and here's how i would say one could draw the lines. again, we're reaching the point where something has to happen. and plenty of bearish people i'm sure. i'm going to take the other side of that. and then the short-term chart. and again, drawing the lines. so what we're looking for is a resolution of this standoff, the short term, the long term, the really long-term. we're playing for a move out of this range up to just where we were at 580. so a 5%, 6% move bringing us out of this final wedge just to where we were earlier in the year, playing for about a 6% move up. >> wow. really has gone nowhere. thanks, carter. mike, how are you trading this fundamentally? >> there's a legitimate debate going on here because for a long time this was a growth company and it isn't really -- top line revenues are dropping. we've seen a couple missteps. they have not made a decent play

in social media at all. google glass, what happened to that thing? there's a couple things we could concern ourselves with. we can look at the val sxwaigs see it's trading cheaper and because that's a don't think people are expecting a lost growth out of this business now and trying to figure out whether they're actually going to get on board. you suggested possible qi buying twitter but the price of that's onerous. when i take a look at that one of the things i see is there's a little extra concern in the options market. even though the stock is moving in that really narrow band options are priced like it's going november much more sharply. when i take take a look at think think the way to play this is to go and buy call spread. that's going to mitigate the higher priced -- i was looking out at september at the 566 call spread, pay -- against it for 1/2 bucks. that will help offset some of the decay that will experience but i wouldn't want to necessarily buy the stock. >> dan? >> i like the trade. i think that's the way to play if but here's what's got to happen for the stock to break to the up side. they have to do something bold in my opinion. you talked about maybe some sort

of transformative acquisition. they have $70 billion in cash on their balance sheet that they don't buy their stock back with. and you know, every other stock in the top ten of the nasdaq 100, they buy it back hand over fist. that's probably one of the largest reasons why this stock has underperformed over the last year, but something's got to give here. and i'm not certain, you know, mike, you talk about the growth, it's still growing, double digits, sales and earnings. and that's pretty good. and the stock is reasonably valued here. but i think investors have gotten used to 20% growth and they're not going to get that anymore. i think they're going to have do something to stimulate it or kind of manufacture earnings a little bit. >> a little financial engineering but they may very well get that. they have some new appointments and that may change things. if they do start returning cash to shareholders in the form of buybacks then the only resolution is to the up side because that's going to create a floor in the stock. but they haven't said absolutely that that's how they plan to handle it. >> i know you mentioned the missteps but this is a company that still gets 90% of its revenues from search and that's really the story with the business. >> it's only going to get its revenues from that if every

other idea they have doesn't generate anything. >> that's true. carter, final word to you. >> the point of equilibrium is that equilibrium never lasts, it can persist for a while but this is about as long as it can go. there's a perfectly reasonable case to say it's going to come out through the bottom. but you've got to make your bets and stay around for the action to -- or stay away and wait for the action to start and go with it as a momentum trade. >> and your bet is higher. all right. see how it does. up next, chinese stocks are tanking. we'll tell you why the sell-off could actually mean big trouble for one dow component when "options action" returns. like the mail guy at 3:12 every day or jerry, getting dumped every third tuesday. this happens every third tuesday. we have pattern recognition technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that.

for all the confidence you need. td ameritrade. you got this.

ahh... steve, other than making me move stuff, ces. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade. you got this. check that out. a scary picture. that is the shanghai composite, down more than 20% from its recent high. dan, what names in the u.s. stand to suffer from the china plunge? >> i think it's really important to separate the volatility in the stock market and the speculation that's existed there from what's going on in the chinese economy, and we really

don't know. obviously it's a really centrally planned economy but that volatility is kind of frightening and it probably, when you think about it, there was a wealth effect created when stocks went up to $10 trillion in value between their exchanges and if it goes down a lot it's also going to destroy a lot of wealth. so when you think about it here, think about u.s. multinationals and where some of them are expected to get their growth. we talk about cat it seems like every quarter on this desk here. and you know, this is one that's been stuck in the mud here and it's down 23% from the 52-week highs. it's down 5% on the year. in stark contrast to deere which has just today made a new 52-week high. these guys, cat, that is, gets more than 2/3 of their sales from outside the u.s. so the dollar and emerging markets, that's a big one here. i think if you see this stock back toward 90 prior to their q2 report in late july i think you really want to think about as a trade shorting it and trying to make a break back below this 80 level that's been big support for the last few years. >> before we talk about cattar pilar let's go to the newsroom because kate rogers has some breaking news for us on greece.

kate? >> hi, sara. reuters is citing a government source that greek prime minister tsipras will speak any moment to reporters on a proposed bailout deal for greece. this is something we're going to be continuing to monitor and we're all awaiting his statement on that. greek prime minister tsipras will be giving a referendum shortly on the situation in greece and we'll monitoring it and bringing you any updates. >> wow. a tense weekend in greece. kate rogers, thanks very much. let's talk about the market risks for a moment because we were just talking about that china slide. we're going into another weekend where we do not have a resolution here on greece. >> honestly, i'm a little bit less concerned about greece than i am about what's going on in china. greece is a blip. we're probably going to get some kind of can-kicking exercise here. and we're either going to find a resolution or they're going to kick the can. >> what if they don't? >> so we have a grexit. we have 3% of the euro zone -- >> china's growing at 4 greeces

a year. >> it's not about the size of greece. it's about the structure of the eu euro, which is the second most widely held currency. >> portugal and spain, then you've got a big problem. >> if they have an organized exit of greece, which is not something i hear anybody talk about, that could ultimately be viewed as a positive. it can't be hotel california or a roach motel where you can check in but you can never check out. that doesn't give the euro zone the flexibility it requires. and if they demonstrated that they have that flexibility, ultimately that could make the euro zone stronger. >> i think what sara's getting to is we can sit here on the desk and opine on what an orderly exit looks like but at the end of the day we don't really know, no one knows what the unforeseen circumstances are. there's a whole set of unforeseen potential outcomes here. and i just mentioned that you when you think about our markets here in the u.s., we've exhibited no volatility as far as equities, but we've seen volatility in global equities. we've seen them in currency wiz, we've seen them in commodities. we've seen them in basically every other risk asset in bonds other than u.s. equities. to me i think if you do have something that is unexpected and

it's kind of negative, i think there is a potential for a greater than expected move in the u.s. stock market. >> and we could see -- we're waiting for news all through this weekend. it's past midnight in greece right now. we get this news on the prime minister. we'll continue to monitor it. up next your tweets and the final call from the options pits. when we come back. here at td ameritrade, they work hard. wow, that was random. random? no it's all about understanding patterns like the mail guy at 3:12 every day or jerry, getting dumped every third tuesday. this happens every third tuesday. we have pattern recognition technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. for all the confidence you need. td ameritrade. you got this.

run to the finish line. this stock popped nearly 5%. i've got the ceo. plus my take on nike and micron. and of course your game plan for the week ahead. "mad money" is next. i'm here at the td ameritrade trader offices. ahh... steve, other than making me move stuff, what are you working on?

let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade. you got this. let's take a tweet now. scott says great show, everyone. thanks, scott. what effect does the netflix stock split have on holders of options? is it just x times more calls puts? mike, seven times i guess. >> you would have seven times as many options but you have to also adjust the strike. so you divide the strike by how much the split is. if you oent 630 puts right now you are going to own seven times as many of the 90 strike puts. if you own the seven strike calls you'll own seven times as many of the 100 strike calls. very good for options traders.

you're going to have more of them i guess and there might be more volatility. sometimes that happens. >> all right. next up, good answer. the retail trader says, any thoughts on the rails? i like csx. carter, what do you think the charts say on rails? >> rails are poor, the airlines are joining, the transports was the single best, with the exception of biotech area over a two-year period, 13, 14, and now it's a full-fledged bullish to bearish reversal. we think the whole thing goes lower, wouldn't buy them. >> in correction territory? >> i would say the rails should be doing better. if all the slack that existed the fed's telling us about in this economy you would think that very cyclical sectors like the rails would be doing better. the transports are not. i'm not a dow theorist but i think there's something to this. >> time for the final call. the last word from the options pits. carter, first to you. >> well, xlu, be contrarian, take some, buy some, get long. >> mike. >> if you're inclined to be long google the way to do it is with call spreads. >> and dan. >> we're in a market here where they're really punishing disappointing names. i think intel sets up that way

into the july q2 report. i think you -- >> that's our time. i'm sara eisen. melissa lee back next week. for >> my mission is simple -- to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere. and i promise to help you find it. "mad money" starts now! hey, i'm cramer, welcome to "mad money." welcome to cramerica. other people want to make friends, i just want to make you some money. my job is not just to entertain but educate and teach you. call or tweet me. another day of hope about the talks in greece, based on absolutely nothing. not a shred of reality which is