Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Jan 18, 2023 at 11:50 AM
  • Midday Market Check
 
Published on Jan 18, 2023 at 11:08 AM
  • Intraday Option Activity
  • Analyst Update
 Overall options volume is today running at four times the intraday average, with 49,000 calls and 33,000 puts across the tape so far. The January 2023 53-strike call is seeing the most action, with positions being opened there, followed by the 55-strike call in that series.
Published on Jan 18, 2023 at 10:50 AM
  • Buzz Stocks

Moderna Inc (NASDAQ:MRNA) stock is enjoying vaccine tailwinds today, though outside the realm of Covid this time. The company announced positive results for a late-stage trial of mRNA-1345, its experimental messenger RNA vaccine for respiratory syncytial virus (RSV), and plans to submit it for regulatory approval consideration globally in the first half of this year. MRNA is up 8.4% at $206.55 at last glance.

Today's pop has Moderna stock trading at its highest level since Dec. 22. Up 66% in just the past three months, the shares are already sporting a 10% year-over-year gain. Plus, the stock's ascending 60-day moving average lingers below as support, and was a . 

Chardan Capital Markets raised its price target to $208 from $191 this morning. Of the 14 analysts in coverage, six carry a "strong buy" rating, with the remaining eight a "hold," so if more upbeat vaccine news emerges, the brokerage bunch may shift their bearish stance.

Options bulls have been targeting MRNA lately. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day call/put volume ratio of 1.59 ranks in the 97th percentile of its annual range. 

Today's events are reinforcing this bullish sentiment, as 51,000 calls have crossed the tape so far -- five times what's typically seen at this point -- in comparison to 20,000 puts. The January 210 call is the most popular by far, with new positions opening there. These options are attractively priced at the moment, too. MRNA's Schaeffer's Volatility Index (SVI) of 54% sits in the 10th percentile of its annual range. 

Published on Jan 18, 2023 at 10:33 AM
  • Buzz Stocks
 
Published on Jan 18, 2023 at 9:23 AM
  • Opening View

The stock market is shifting higher before the bell, with futures on the Dow Jones Industrial Average (DJIA), Nasdaq-100 Index (NDX), and S&P 500 Index (SPX) all enjoying modest gains. Investors are busy with economic data today, with all eyes on December's producer price index (PPI), which fell a much larger-than-expected 0.5% in December. This is giving some relief to broader inflation/Fed rate hike worries. Meanwhile, the PPI’s final demand energy index dropped 7.9%, and retail sales fell 1.1%. In response, the 10-year Treasury yield fell back below 3.44%.

Continue reading for more on today's market, including:

  • Carvana's recent rally out of penny stock territory. 
  • Software stock could soon break above key levels
  • Plus, UAL jumps after earnings; and 2 analyst calls today. 

Futures Jan18

5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw more than 1.5 million call contracts and 891,287 put contracts traded on Tuesday. The single-session equity put/call ratio fell to 0.59 and the 21-day moving average stayed at 0.81.
  2. United Airlines Holdings, Inc (NASDAQ:UAL) is up 4.3% premarket, after the company reported better-than-expected fourth-quarter results and raised its profit forecast. Barclays chimed in with a price-target hike to $52 from $45 after the event. UAL has been rallying since the start of the year, already up 35.8% in 2023.
  3. BofA Global Research downgraded Levi Strauss & Co (NYSE:LEVI) to "neutral" from "buy," with a price-target cut by $2 to $17, citing its earnings setup. LEVI is down 1.6% in electronic trading, and heading into today with a 29.5% year-over-year deficit. 
  4. GoDaddy Inc (NYSE:GDDY) is up 3.5% before the bell, after an upgrade from Evercore ISI to "outperform" from "in-line." Should these gains hold, GDDY will break above pressure at the $76 level on the charts. 
  5. Today will bring the Beige Book, industrial production, and capacity utilization data, the National Association of Home Builders (NAHB) home builders' index, and business inventories.

buzzjan18

Asian, European Markets Rise

Asian stocks were mostly higher on Wednesday. Investors are unpacking the surprising policy decision from the Bank of Japan (BoJ) to not expand its yield curve control range and held its interest rates at -0.1%, which weakened the yen against the greenback. Japan’s Nikkei managed a 2.5% pop in response, leading the region’s gainers. Elsewhere, Hong Kong’s Hang Seng tacked on 0.5% and China’s Shanghai Composite was unchanged, as the country’s reopening optimism boosted oil prices. Rounding out the region, South Korea’s Kospi shed 0.5%.

All eyes are remain on the World Economic Forum in Davos, Switzerland, and European markets are cautiously higher this afternoon despite an uncertain economic outlook. Inflation in the U.K. fell 10.5% in December, falling slightly below economists’ estimates and marking the second month of declines. At last check, the FTSE 100 in London sports a paltry lead, while France’s CAC 40 and Germany’s DAX are 0.2% and 0.3% higher, respectively.

Published on Jan 18, 2023 at 8:50 AM
  • Editor's Pick
  • Trader Content

Below is an excerpt from this yesterday's episode of Schaeffer's Playbook of the Week, featuring Schaeffer's Senior Market Strategist Matthew Timpane. Below, Matthew makes a bullish case for software stock Okta Inc (NASDAQ:OKTA).

"OKTA, a major player in two-factor authentication, had a powerful post-earnings gap back in December and has since been in a flaying pattern, per the chart below. It broke out of this downtrend and then successfully retested to start 2023, pulling right back into a volume shelf, making it quite the interesting setup.

We want to see this move above $70, and if so, we’ll get aggressive. If it gets above $70, we have quick levels it can run down. You have the $78-$77 area, and then all the way up to $90. However, keep an eye on the 200-day moving average that OKTA has to contend with as the trade evolves. 

OKTA PLBK

At last check, the shares are about to break that $70 pivot level, which is a key gamma strike. The stock's front-month gamma-weighted Schaeffer's put/call open interest ratio (SOIR) is 1.14, a put-heavy number that has typically led to rallies. Analyst ratings came in at 15 of 33 sporting "hold" or "strong sell" ratings, so there’s still plenty of room for upgrades. We’ve seen a lot of downgrades in the last two years as the growth story ended. You didn’t see these high-flyers in 2022.

OKTA's 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is 0.82, so while calls still outflank puts on an absolute basis, the closer the number is to 1.0, the more prevalent put traders are. Digging deeper, the 65-strike is forming a put wall for support that we'll use as a stop.

Options are comparatively cheap right now compared to the last year, per the Schaeffer's Volatility Index (SVI) of 57% that ranks higher than just 13% of readings from the past year. Furthermore, its Schaeffer's Volatility Scorecard (SVS) is rising and checks in at 72 out of 100, meaning OKTA has exceeded option traders' volatility expectations during the past year."

Join Schaeffer's Playbook of the Week now and tune in every Monday morning at 8:30 a.m. to get ready for the trading week with me. Click here for more information to get started.

Schaeffer's Playbook of the Week

Published on Jan 17, 2023 at 4:26 PM
  • Market Recap

Stocks took a breather as they returned from the holiday weekend, with the Dow shedding 391 points as it joined the S&P 500 in snapping a four-day win streak. Bank earnings weighed on the broader market, which had been enjoying tailwinds following inflation-related data, especially after Goldman Sachs (GS) reported its worst earnings miss in over 10 years. Meanwhile, the Nasdaq logged a modest gain and marked its seventh-straight win.  

Continue reading for more on today's market, including:

Closing Index Summary January 172023

NYSE and Nasdaq Stats January 172023

5 Things to Know Today 

  1. Peloton (PTON) hired former Twitter (TWTR) executive Leslie Berland, who left the social platform after Elon Musk’s takeover, as its chief marketing officer.(CNBC)
  2. The Centers and Disease Control and Prevention (CDC) will investigate a potential link between Pfizer (PFE) and BioNTech (BTNC) bivalent Covid booster and stroke in people who are 65 or older. (MarketWatch
  3. Shareholder rights plan boosted struggling Carvana stock.
  4. Analysts: Church & Dwight stock boasts attractive valuation
  5. Keep tabs on these 3 heavy hitters after a round of bear notes.

Earnings January 172023

Unusual Options Activity January 172023

Gold Prices Cool Down to Kick Off New Week

Oil prices finished higher on Tuesday, and settled above the $80 region for the first time in over two weeks. Better-than-expected economic data out of China contributed to this rise, as the country continues to reassess its strict Covid-19 measures. February-dated crude rose 32 cents, or 0.4%, to settle at $80.18 per barrel.

Meanwhile, gold prices settled lower, but still managed to stay above the psychologically significant $1,900 region. Investors were eyeing the World Economic Forum gathering in Davos, and weighed gold demand from China. February-dated gold fell $11.80, or 0.6%, to settle at $1,909.90 per ounce.

Published on Jan 17, 2023 at 2:34 PM
  • Buzz Stocks

Carvana Co (NYSE:CVNA) adopted a shareholder rights plan, or a "poison pill," to protect its ability to reduce future tax bills. Plus, Ally Bank and Ally Financial Inc have agreed to buy $4 billion in auto loans from the used car platform. Carvana stock is surging after the news, up 5.5% at $7.40, and earlier hit $8.21.

On the charts, CVNA is further removing itself from penny stock territory, where it sat from early December until last week. Year-to-date, the equity is already up 56.3%, though its 60-day moving average is still providing pressure. It's also worth noting that the shares are on the short sell restricted (SSR) list today, amid the volatility. 

CVNA Jan17

So far today, 81,000 calls have crossed the tape -- double the intraday average -- in comparison to 25,000 puts. The January 10 call is the most active contract, followed by the April 7.50 call. 

It's also worth noting that short interest represents 56.6% of the stock's available float. It would take nearly three days to buy back these bearish bets, at CVNA's average pace of trading. 

Options look like a good way to go when betting on Carvana stock, too, per its Schaeffer's Volatility Scorecard (SVS), which sits at 100. This this means the security always exceeded option traders' volatility expectations during the past year.

Published on Jan 17, 2023 at 2:29 PM
  • Quantitative Analysis

Southern Copper Corp (NYSE:SCCO) is down 2.9% to trade at $74.85 at last check, taking a breather alongside Wall Street after surging to its highest level since April in the previous session. The stock still boasts an 11% year-over-year lead, though, and has added 59% in the past three months. Better yet, a historically bullish signal now flashing could give the security a short-term boost. 

According to Schaeffer's Quantitative Analyst Rocky White, SCCO's peak comes amid historically low implied volatility. This has been a historically bullish combination for the shares in the past. White's data shows two other signals in the last five years when the security was trading within 2% of its 52-week high, while its Schaeffer's Volatility Index (SVI) stood in the 20th percentile of its annual range or lower. This is currently the case with Southern Copper stock's SVI of 36%, which stands in the 16th percentile of its 12-month range. 

One month after these signals, SCCO was higher, averaging a 9.1% return.  From its current perch, a move of similar magnitude would place the security above $81 for the first time since May 2021.

Options players lean bullish. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), SSCO's 50-day call/put volume ratio of 9.29 ranks higher than 94% of annual readings. In other words, calls have rarely been more popular. 

Short sellers are starting to hit the exits, too, with short interest down 12.3% in the two most recent  reporting periods. Still, the 5.75 million shares sold short make up 6.8% of the equity's available float.

Published on Jan 17, 2023 at 12:44 PM
  • Quantitative Analysis

Real estate investment trust (REIT) American Tower Corp (NYSE:AMT) is 0.6% higher today, last seen trading at $234.18 and heading toward a seventh-straight win. The stock is stepping up early in 2023, already boasting a 10.3% year-to-date lead after three straight weekly wins. However, this rally has put AMT within striking distance of a historically bearish trendline. 

Specifically, American Tower stock is trading within one standard deviation of its 160-day moving average, after months of trading below the trendline. According to a study from Schaeffer's Quantitative Analyst Rocky White, five similar signals occurred during the last three years. One month later, the stock was lower all five times, averaging a 3.9% drop.

AMT Chart January 172023

A shift in the options pits could weigh. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), American Tower stock sports a 10-day put/call volume ratio of 4.62, which stands higher than 99% of readings from the past 12 months. 

Weighing in with options could be the route to go, as AMT's Schaeffer's Volatility Index (SVI) 27% ranks higher than just 26% of readings from the past year. This means options traders are pricing in low volatility expectations.  Furthermore, its Schaeffer's Volatility Scorecard (SVS) sits at a 95 out of 100, meaning American Tower stock has exceeded option traders' volatility expectations during the past year.

Published on Jan 17, 2023 at 11:40 AM
Updated on Jan 17, 2023 at 11:40 AM
  • Midday Market Check
 
Published on Jan 17, 2023 at 11:37 AM
  • Options Recommendations
 

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