was that a wild week or what? the gang is all here. they're going to try to make sense of it. here's what's coming up. >> yeah, that sort of sums of tech this week. it's two names in particular that could really scare investors next week. we'll explain. plus -- that's what traders think one group of stocks will do next week. we'll tell you which stock is poised to surge. and -- something remarkable is going to happen to the bull market next week. we'll tell you what that is, and how you can profit. the action starts right now.

let's get right to it. microsoft and apple tanking on earnings this week, could reports from apple and facebook be the next shoes to drop for tech? let's get in the money right now. dan, how do we set up? >> i think, listen, when you think about technology underperformance this week, it came into the end of the week we saw $50 billion shaved off between google and microsoft today. they were hanging in there, but if you think about it, there were a lot of disappointments this week. ibm, intel in the past week. these two guys, so to me, i think as you look to next week, tuesday and wednesday, we're going to have $1 trillion, or close to it, in a market cap between apple and facebook reporting again. apple, i don't think expectations are particularly high and i don't think the stock will move a heck of a lot one way or the other unless there is a meaningful downgrade. facebook, that stock rallied 15.5% in late january when they beat on the q-4. that seems to be one that people really want to keep in the game here. >> i agree with you.

apple is definitely getting into those sort of drifting around aimless levels that we've seen historically. one of the things that keeps it from having the bottom fall out is the fact that, you know, there is a lot of bad news pricing. you can see that in the valuations. trading ten times earnings. when you have a situation like that, there really isn't that much that can happen to it at this point. you can see a small pullback. facebook, if something bad came out of that, you could see a sharp move. >> technically it's right at the prior peak. it's something that's on your mind, dan, when you're looking at the trade. friday, it was okay. they've gotten right back to the typical levels and it backed away. so the issue here, and we were playing one of these back week, microsoft, of course, but these are bad moves. not gentle telloffs. volumes are triple and double. not good action. >> at the same time it seems the market is treating these individual stories as individual stories, and the s&p still

managed to close higher on the day. which you'd probably would have thought it would have done last night when all these names reported. >> microsoft was definitely its own story. the positive story was, the transformation of their business, going to cloud, basically two big players, amazon and microsoft, this was supposed to be a big growth area that ultimately turns into a continuous money printing press, utility of sorts, and the growth rate was quite disappointing. the earnings call had quite of a negative tenor to it. put those two things together, people had bought into it on the expectation that that thing in particular was going to be good, and it wasn't. of course, it had to sell off as a result. >> a technology select etf, actively traded thing. the xlk is concentrated. six of the holdings in the last week reported. all six have actually missed expectations. and have traded down. and so obviously we have the two big ones today. we had ibm, intel.

there was visa in there. and also verizon, which had a sharp move. one of the reasons this year i've stayed away from trading the xlk, because at&t and verizon are two large holders and thought to be somewhat defensive. but now i think the timing is really interesting to look at the xlk, because next week, we have two stocks that make up about 25% of the weight of this thing. they both disappoint expectations and they both trade lower. they don't even have to trade as badly as microsoft and google did, and the trend is probably broken. the xlk in particular, i think we have a one-year chart here. they couldn't break out at those prior highs from november and december. it just failed. it got down here. the trade i'm looking to do next week, apple's tuesday night. don't do this monday morning. i didn't press it today when the xlk was down. i want to see a little bit of lift on monday or tuesday. so before apple, if you think it can retrace a bit of the 200 moving average, about $42 here, i want to look out to september

expiration. i want to do this right before apple's earnings on a little bit of a bounce today when the stock -- or etf was 43.5. look out to the september expiration and buy the september 43, 38 put spread. you could pay $1 for that, buy one of the september 43 puts for $1.75. actually 39 put. the 43, 39 put spread. sell one of the 39 puts. it costs you a dollar. make up the $3 between 42, down 2.5% from here, and you can make 3%. down 8%. that would be retracing a lot of the move that we just hacked off the bottom here. i love the rich reward. timing is important. wait for a little bit of a bounce next week. >> some would argue that because as you mentioned many of the components, that all the bad news is there. a lot of these stocks that are going to report next week, or both of them, a lot of it is priced in already. >> simply. i'll leave it with this. i think that if they disappoint or it's not good enough to get

them higher, i think the trend is broken and you see a bit of a retracing. >> i don't know that you need to wait for a bounce necessarily to put this trade on. the only thing that would cause that bounce would be to need to recover. i don't know why they necessarily would on monday. if you're concerned about the two big names reporting next week, putting it on even at the current level might still make some sense. >> really, the most important thing is what does this say about the market. the market is -- it ricochets from the weekend of the stocks that are industrial and sort of materials based. america's not going forward on the back of the steel. starbucks and nike and visa and amazon and google and netflix go higher, and they're all struggling. >> biotech earnings is down 15% in 2016. seema mody is in the newsroom to what to expect. >> it's been a roller coaster

ride for biotech this year, but that could come to an end when many big names in the space report earnings. look at thursday. the make or break day for biotech. reports from amgen and guilee ad ad. curiously the options market is expecting a less than average move for all these stocks. let's start with amgen. the implied move is 3% versus nearly 3.5%. there's celgene. gilead, the stock is expected to move roughly 4% in either direction. the company's average move is slightly higher than that. the moves together could represent a nearly $12 billion shift in the market cap. melissa? >> seema, thank you. and carter, biotech could be setting up for a major break-up.

>> one of the biggest laggard year-to-date. the question is, recently, which you'll see, is that they're outperforming. so mason's relative strength often can be the beginning of more relevance. let's take it back to the lows of 2011, when we had the u.s. debt downgrade. obviously one of the biggest winners of all-time. now, what we have is the following. the place that we stopped and started to bounce is not random. if you take the sell-off from 401 to 240, it's exactly, or close to it half way back from 317. so you can look at it as a 50% retracement. and we've come to life vigorously off those lows. here's the spread that still exists. there's your bounce off 50% retracement. here's still the opportunity, despite the bounce, and again, importantly, relative outperformance, the s&p going

like that, more performance. we think this will continue to converge. we would play ibb on the long side, either outright or as paired against the s&p. how can you draw the lines? you can draw them this way, if you're negative, which is a head and shoulders top, which is exactly right, but guess what, that played out. we broke. and now this ricochet hasn't quite run its course. we're thinking at least it gets back to the down trend line, which is back to about here, where the neckline is. so another 5%, 6% on the catch-up trade for ibb, which would give us some more convergence here. we like this long. and we want to be there. >> all right. mike, how are you trading this? >> this is the spot where obviously a lot of bad news got baked in before earnings came along. marin had the disappointing news. but the top core constituents of this index are really pretty cheap stocks. we're talking about celgene,

amgen, they actually look like opportunities from here. i think the simple way to make this play, look out to june, and buy the 300, 320 call spread, around 5 bucks. just about 1.5%. give or take. to take a bullish bet that will take you through the june expiration. it will capture a little bit of what's going on next week, and over the next couple of months. there was so much bad news baked into the space, it seems like you would be better poised for an upside move here. >> once it goes up to the downward trend line, 5% or 6%, what happens at that point? >> well, so, you're very kind to suggest that it's going to make it. let's hope so. >> well, let's pretend that -- >> if the trades work out, everyone's happy, then what. in principle when you return to the level, you find difficulty. it's not so much the management off the lows that you've gotten back to a level where people have been hurt and people return to them.

it's really not so much upside. it's whether they can still on a relative basis outperform the s&p. >> i want to ask you, would you play -- would you have this trade on for a return of 5% to 6%? >> i give him a lot of credit. he came on "fast money" a couple of weeks ago when the etf was much lower. i think what he's targeting here and what mike's targeting with the call spread is the move back to the downtrend. that is how i would play it. i wouldn't try to get all geeked up and bust through there. the ibb is still down 30% from the all-time highs. although it's outperformed the s&p a little bit off the lows. to me, i think it probably finds resistance here. i like your call spread. >> you can see that in caterpillar. that was another situation long-term downtrend. obviously it's had a big sharp bounce off the bottom. going into earnings, if you decided to play it for a bullish play, you've got your head taken off, quite plainly. obviously if you want to do this, do it in a risk limiting way. that's why we use the call

spread, 1.5% to make a bullish bet. >> a question out there. send us a tweet and for everything options action, check out our website. while you're there, you can sign up for our super cool newsletter. it's like the "vanity fair" of options. you want to check it out. here's what's coming up next. that pretty much sums up what happened to microsoft today. we'll tell you why some traders saw the rebound coming. stocks have gone up forever. forever. and next week marks a major milestone for the bull market. we'll tell you what it is when "options action" returns. i'm here at the td ameritrade trader offices. 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 and 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. td ameritrade.

herthey work hard.ade, wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: 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. td ameritrade.

welcome back to "options action." let's get to seema mody in the newsroom. >> big ackman pushing square, pushing back its condition in canadian pacific it 6.4%, selling 4.1 million shares, roughly $608 million worth of stock. this comes after ackman's fund die vested internationally a couple of weeks ago as it deals with the loss of galeant pharmaceuticals. >> for the past 12 months, it's down 24%. mike, how would you interpret this? >> well, look, he's probably contending with some liquidity considerations. i don't know this is necessarily a situation where he's really evaluating what he's holding. you have some liquidity there, and you can obviously source it. i think that's basically what he's doing. i wouldn't read a whole lot into

their actions at this point. >> okay. wall street will be celebrating next week as it celebrates a milestone in the bull market. carter? >> by conventional measures, not our view, more than half of stocks down more than 30% at the lows in january. if we were to go with conventional views, this is -- we look at duration magnitude. in terms of duration, the current bull market is now the second longest effectively. and each of these has a time period where those who remember what they were, this is big. this is the post-war era, right? before we got into any trouble. this was '74 to '80 before inflation started hurting things. this, of course, is '87 to 2000. along the way, you have periods where you're down more than 20%. but they don't really amount to bear markets.

here is magnitude. and this is also important in the sense that you can say, wait a minute, from 1987 to 2000, there were two periods where it was down more than 20%, which is true. in 1990, and in 1998. but those aren't bear markets, they are resets. they go straight down and back up. a bear market like we've seen in the last 2 1/2 years, where stocks drop 30% or more. these are milestones a lot of people are looking at. this also makes the top five. what we do know is that market's not cheap. you can look at it a thousand different ways. if you price the sales, price the book, cash flow, but if you were to look at just a straight up pe multiple, based on as reported earnings, nonof the nonreoccurring and store day items excluded. we're trading at basically a 24 multiple. now, remember, you're most expensive at a low because the denominator is eviscerated. you'll have pes that read

excessively at the '09 low. but this is at or near the top of where it can go. >> all right. what do you think, mike? how much longer do we have as we celebrate this anniversary? >> it's true, earnings were eviscerated. one of the things we ought to be thinking about is, what do we think the next ten years for the s&p is going to be for average earnings. the other thing is, what are your alternatives. we don't invest in a vacuum. we have to say, okay, i've got a risk-free ten-year rate at about one spot 89. those choices aren't that great. if you take a look at the earnings yield of the s&p over the risk-free rate and go back a period of 50, 60 years, you actually find right now that spread looks relatively favorable. i think that is part of the bull case people have for equity right now. >> my gripe about that is the last two tops, if you look back at the year 2000 and back at 2007, 2008, where the s&p actually dropped 50% from those peaks, the fed funds rate was at

5%. and when you think about that, and you think about where we are, and think about the fed's inability to raise rates at this stage of the game and think about how much higher we are in terms of, you know, the s&p 500, to me, they've forced us to make really bad decisions. when you think about that. i know the ten-year treasury yield doesn't sound attractive, but at some point cash under your pillow or hard assets is going to look good. >> it's going to look attractive when rates really start to rise. i think you're going to continue to see that correlation right there. basically i don't see why equity should sell off hard until we see the rates go up. >> equities did sell off really hard. if you were to look at the lows, despite this happy ricochet over the last nine weeks, at the lows in january and february, 50% of all stocks in the russell 3,000, 98% of the investable capital in

the united states, not just the s&p, 50% of the stocks were down more than 30%. if you want to check off the 20%, it meets that criteria. the ricochet doesn't help things, because -- let's take u.s. steel, 6 to 20. the cap right now is $3.8 billion. johnson & johnson, if it goes up or down 1%, you're out of business, go home. it doesn't matter. the big stocks are starting to struggle. starbucks, nike, this is the problem. >> coming up next, it was a blood bath this week for microsoft earnings. if you lost money, our traders have a way to make it back. more "options action" right after this. i'm here at the td ameritrade trader offices. 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 and 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. td ameritrade.

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said microsoft was about to hit a new high. take a listen. >> big beat. we're going to make the bet that it will do this again. and get back to the all-time high. >> i think the way to do this is to look at the june 57.5, 60 call spread. pay a buck for the 57.5. sell the 60s for 35 cents. >> as you all know by now, microsoft fell more than 7% today. >> if you make a trade and you have a premise, the premise is we're going to break out, and it's going to be earnings related. a gap up the last time. gap up the prior time. got the exact opposite outcome. a gap down. if the reason is gone, the trade is gone. it's over. walk away. it didn't do what it was supposed to do. >> as far as the options trade is concerned, you can't walk away. it walked away from you. it doesn't have any value left. you're basically stuck with a worthless call. the good news is, we only spent

a little over 1% of the stock price, and that's the reason you do this in the first place. there we are. >> you're out. okay. dan's turn. also last week you said qualcomm would be the next chip stock to tank. take a listen. >> i think the stock sets up for a good short opportunity here. when it was trading at $51.60 today, you could look out to may expiration. by the may 52 half, made 45. put spread. >> now, qualcomm has actually rallied 3% this week. dan, what are you doing? >> it reacted positively to the negative news. they have apple here. they talked about they're going to lose some of the apple business in the iphone 7. i think you take it off. it's acting good. you take the loss and move on. we've got your tweets and the final call. i'm here at the td ameritrade trader offices.

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 and 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. td ameritrade. you won't see these folks they have businesses to run. they have passions to pursue. how do they avoid trips to the post office? stamps.com mail letters, ship packages, all the services of the post office right on your computer. get a 4 week trial, plus $100 in extras including postage and a digital scale. go to stamps.com/tv and never go to the post office again.

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let's get to a tweet. serious call buying in the week. time to get long. also is baba expected to deliver a good quarter. yahoo! is going to be finalizing bids next week. so mike, what would you do? >> i would buy call spreads rather than the outrights. we saw a lot of activity in july. price options is relatively elevated. call spreads will be a smarter way to make the bull bets in this one. >> i don't know what they're expecting for the quarter, but i would be on the long side. >> time for the "final call." >> playing the relative strength in this etf. >> five bucks to the call spread in ibb. >> dan nathan? >> the xlk, i wanted to be specific about this. i would like to see a little bit of a move higher before i put the trade on prior to p a pl's earnings. i don't like the idea of

pressing these shorts. you can have them outperform next week. it's a longer dated trade. our time has ex pishd. i'm melissa lee. don't go anywhere. 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. 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'm trying to make you a little money. my job isn't just to entertain but to teach you. call me at 1-800-743-cnbc. or tweet me @jim cramer. let my get it off my chest at the top. i hate next week. just putting it out there. next week it's busiest reporting week of the earning season. that means