Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Jan 25, 2024 at 2:07 PM
  • Buzz Stocks

Airline stocks are having a day today, even as Boeing (BA) 737 MAX drama spirals out of control. American Airlines Group Inc (NASDAQ:AAL)Delta Air Lines, Inc. (NYSE:DAL), and United Airlines Holdings Inc (NASDAQ:UAL) are all varying degrees higher today, shaking off the 737 nonsense and enjoying a post-earnings halo lift from one of their own. 

The sector tailwinds are all because of AAL, last seen up 10.5% to trade at $15.39. The company's fourth-quarter earnings surpassed estimates, while the 2024 profit forecast also topped forecasts, thanks to strong demand for international travel. AAL is on track for its biggest single-day gain in over a year. 

DAL is 3.6% higher to trade at $39.59, helping the stock reclaim its year-over-year breakeven level. Just yesterday, a Delta-owned Boeing aircraft lost a nose tire while taxiing in Atlanta. 

UAL was last seen up 3.5% to trade at $42.26, now above its year-to-date breakeven level. In an effort to appease red-hot travel demand, the airliner announced over 100 added flights to cities in the U.S. and Canada this summer. 

While all three stocks don't boast eye-popping gains, consider the table below that shows just how much AAL, DAL, and UAL have bounced off their late-October annual lows.

Airline Stocks

These stocks also all have respective Schaeffer's Volatility Scorecard (SVS) readings of 97, 98, and 87. This means AAL, DAL, and UAL all have tended to exceed options traders' volatility expectations in the past year -- a boon for would-be premium buyers.

Published on Jan 25, 2024 at 1:58 PM
  • Earnings Preview
 
Published on Jan 25, 2024 at 11:56 AM
  • Midday Market Check

 

 

Published on Jan 25, 2024 at 11:36 AM
  • Options Recommendations

Subscribers to Schaeffer's Weekend Trader options recommendation service received this TJX commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

After an early-January pullback to its 20-day moving average, TJX Companies Inc (NYSE:TJX) stock just hit a fresh record high after completing a bullish cup-and-handle pattern on the daily chart. With this technical support in place, now looks like a good time to weigh in on the retail giant with calls.
 
The shares have been testing support around $93.50, which is home to their September 2022 peak. Plus, on the monthly chart, TJX last month broke out above a trendline connecting higher highs since 2013.
 
wtreposttjx

 

From March through November, short interest doubled to a 15-month high. Since then, shorts have slowly been covering, and the recent breakout might induce more covering activity as these shorts are now underwater. Furthermore, per TradeAlert data, put open interest (OI) now exceeds call open interest.

 
Our recommended call has a leverage ratio 11, and will double on a 9.3% pop in the underlying shares.

Published on Jan 25, 2024 at 10:29 AM
  • Analyst Update

Shares of Las Vegas Sands Corp (NYSE:LVS) are 0.9% higher at $50.06 at last glance, after the casino and resort giant last night reported fourth-quarter earnings and revenue that topped Wall Street's estimates.  

In response, J.P. Morgan Securities raised its price target to $59 from $56. In its bull note, the analyst said it thinks "LVS 4Q23 results should be viewed favorably in relation to recently subdued investors' expectations and China-macro-concern-driven awful investor sentiment." Coming into today, the majority of analysts were already bullish. In fact, nine of 11 covering brokerages rated LVS a "buy" or better versus two that recommended a tepid "hold." 

Options traders are also weighing in, with Las Vegas Sands stock's normally quiet options pits already seeing four times the average intraday volume. Most popular is the January 2024 50-strike call that expires at the end of tomorrow's session. 

A broader look shows a bullish bias amongst options traders. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OM X PHLX (PHLX), LVS' 50-day call/put ratio of 6.48 ranks in the 93rd percentile of annual readings. This means options traders have preferred calls over puts during the last 10 weeks.

Thanks to today's jump, Las Vegas Sands stock now boasts a 1.6% year-to-date lead, though it remains 9.1% lower over the last 12 months. The equity was able to clear long-term resistance at its 160-day moving average out of the gate today, but has since pulled back below the trendline. However, LVS does boast support from its 120-day moving average, after battling with the trendline since the beginning of the year.

Published on Jan 25, 2024 at 10:22 AM
  • Buzz Stocks

The Dow is up triple digits this morning, and a lot of it has to do with IBM Corp (NYSE:IBM). The stock is up 10.2% to trade at $191.58 at last check, after the tech titan reported adjusted earnings of $3.87 per share on $17.38 billion in revenue for the fourth quarter, both of which exceeded analyst estimates. IBM also reported upbeat guidance for 2024 thanks to increased demand for its artificial intelligence (AI) software. 

In response, no fewer than six brokerages have upped their price target, the highest coming from Jefferies to $215 from $180. The bull notes were overdue; coming into today, IBM's consensus 12-month price target of $173.87 was a 6.7% discount from its current perch. Upgrades could keep the wind at the equity's back, considering 10 of the 13 brokerages in coverage maintain "hold" or "strong sell" ratings.

Out of the gate, the stock hit a 10-year high of $192.39, and is on track for its best single-session pop since March 2020. The shares are now over 33% higher year-over-year, with support in place at their ascending 40-day moving average. 

In just the first hour of trading, over 54,000 calls have changed hands, volume that's pacing to be in the highest percentile of its annual range. The weekly 1/26 197.50-strike call that expires tomorrow is the most popular, as is the February 195 call. 

Published on Jan 25, 2024 at 9:05 AM
Updated on Jan 25, 2024 at 9:12 AM
  • Opening View

Stock futures are steady on the heels of a fifth-consecutive win from both the Nasdaq Composite (IXIC) and S&P 500 Index (SPX). Earnings season remains in focus today, with investors digesting reports from the likes of IBM (IBM), Tesla (TSLA), and several airlines.

On the economic front, all eyes are on gross domestic product (GDP) data, which showed the U.S. economy enjoyed a better-than-expected 3.3% growth for the fourth quarter. Before the bell, futures on the Nasdaq-100 Index (NDX) and S&P 500 are cautiously higher, while Dow Jones Industrial Average (DJI) futures sit just below breakeven.

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

  • All eyes the Federal Reserve next week.
  • This foolproof "buy" signal has never been wrong.
  • Plus, Tesla, IBM move in opposite directions; and Nokia reveals buyback program. 

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5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw more than 1.4 million call contracts and 1 million put contracts traded on Wednesday. The single-session equity put/call ratio rose to 0.67, and the 21-day moving average remained at 0.71. 
  2. Electric vehicle (EV) stock Tesla Inc (NASDAQ:TSLA) is plummeting 6% before the bell, after the company posted disappointing auto revenue and a significantly lower volume growth outlook year-over-year (YoY). Tesla's adjusted earnings per share (EPS) of 71 cents came in short of the 74 EPS estimate. Heading into today, TSLA was already facing a 21% six-month deficit.
  3. On the flip side, tech stock IBM Common Stock (NYSE:IBM) is enjoying an 8% premarket pop, after posting a top- and bottom-line beat for the fourth quarter. A 4% YoY revenue surge and news the company plans to purchase more software assets in 2024, has the stock flirting with decade-level highs.
  4. Nokia Oyj (NYSE:NOK) stock is surging this morning, slated to open up 8.5% after announcing plans for a two-year buyback program, valued at 600 million euro. Net sales for the telecommunications stock's Q4 pulled back, however, and year-over-year, NOK has shed 25%.
  5. Earnings continue to dominate this week. 

buzzjan25

People's Bank of China Note Sends Asian Markets Higher

Stocks in Asia were higher Thursday, led by outsized moves in China and Hong Kong, after the People’s Bank of China said it would reduce reserve requirements for lenders in the country through 2024. The Shanghai Composite led the region with a 3% lead, while the Hang Seng tacked on 2%, with property stocks driving gains in both indexes. Elsewhere, Japan’s Nikkei and South Korea’s Kospi both rose 0.03%, with the latter’s fourth-quarter GDP growing at a faster-than-expected pace.

European markets, meanwhile, are lower this afternoon, as traders await the European Central Bank’s (ECB) latest monetary policy decision. At last glance, France’s CAC 40 is 0.6% lower, Germany’s DAX is down 0.4%, and London’s FTSE 100 is off by 0.2%.

Published on Jan 24, 2024 at 4:26 PM
  • Market Recap

A stellar earnings report from Netflix (NFLX) continued to help tech stocks rally, putting the Nasdaq at its highest level since December 2021 and the S&P 500 at a fresh record high. Both benchmarks also logged their fifth-straight win, while the Dow fell for a second consecutive session. 

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

  • This bull signal has never been wrong.
  • Keep an eye on this crypto stock over the next month.
  • Plus, how to play the SPX's rally; behind the chip sector's boom; and Netflix's earnings.

indexesjan24

nysejan24

5 Things to Know Today

    1. Even amid all the turmoil, Boeing (BA) is slated to deliver its first 737 MAX jet to China since March 2019. (Reuters)
    2. The United Auto Workers (UAW) union endorsed U.S. President Joe Biden for reelection this year. (CNBC)
    3. How to play the market after the SPX's record high.
    4. What boosted the semiconductor sector today.
    5. Streaming giant nabbed two-year highs after earnings.

    earningsjan24

    uvoljan24

    Oil Futures Jump as Investors Focus on Production, Demand 

    Oil futures rose today after weather-related issues put pressure on U.S. oil production. In addition, China's economic measure bolstered investors confidence in energy demand. For the session, March-dated West Texas Intermediate Crude (WTI) gained 72 cents, or 1%, to finish at $75.09 a barrel on the day.

    Gold prices fell today despite a weakened U.S. dollar. At last look, February-dated gold was down $9.80, or -0.5%, to settle at at $2,016 for the session.

    Published on Jan 24, 2024 at 1:45 PM
    • Quantitative Analysis

    Bank stock Citigroup Inc (NYSE:C) is up 4% in 2024, but has cooled off since scraping a nearly two-year high of $54.74 on Jan. 4. Thanks to a 1% post-earnings pop on Jan. 12, C is on the move again and could make another run at multi-year highs, if past is precedent. 

    Citigroup stock's recent highs come amid historically low implied volatility (IV), which has been a bullish combination in the past. Per Schaeffer's Quantitative Analyst Rocky White, there were three other signals over the past five years when C 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 the case with the stock's current SVI of 23%, which stands in the low 11th percentile of annual readings. Per White's data, the shares were higher one month later all three times after the signal, averaging a 5.1% pop. From its current perch at $53.39, a move of similar magnitude would place the stock above $56 for the first time since March 2022.

    C Stock Chart

    Keep an eye out for a shift in sentiment among brokerages. Of the 21 covering the bank stock, 14 maintain "hold" or "strong sell" ratings. With the bank sector buzzing as business activity picks up and potential interest rate cuts from the Federal Reserve loom, now may be the time to purchase calls on C. 

    Published on Jan 24, 2024 at 1:15 PM
    • Quantitative Analysis

    Since soaring to their highest level since November 2021 amid a rise in Bitcoin (BTC), shares of MicroStrategy Inc (NASDAQ:MSTR) have quickly fallen from grace. The security is already down nearly 28% in 2024, yesterday touching a more than two-month low after BTC slipped below the $40,000 level. However, MSTR was last seen 1.6% higher today at $457.56, and its aforementioned pullback has placed it near a historically bullish trendline.

    More specifically, the crypto-adjacent stock just ran into its 120-day moving average, after trading above it since late-October. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, five similar signals occurred during the past three years. MSTR was higher after 60%, averaging a one-month gain of 13.1%. A similar move from its current perch would put the security at around $517.50.

    MSTR Chart January 242024

    MicroStrategy stock's Relative Strength Index (RSI) of 12.2 sits deep in "oversold" territory, indicating a short-term bounce could be in the cards. Further, the 2.88 million shares sold short account for 21.2% of the security's total available float.

    Shifting sentiment in the options pits could also yield tailwinds. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OM X PHLX (PHLX), MSTR's 10-day put/call ratio of 1.60 ranks in the 82nd percentile of annual readings. This means options traders have preferred puts over calls during the last two weeks.

    Those looking to bet on the change in tune can buy premium at a reasonable price. This is per MicroStrategy stock's Schaeffer's Volatility Index (SVI) of 67% that stands in the relatively low 29th percentile of its annual range, as well, implying that options players are pricing in lower-than-usual volatility expectations at the moment.

    Published on Jan 24, 2024 at 1:09 PM
    • The Week Ahead
              
    Published on Jan 24, 2024 at 12:00 PM
    • Midday Market Check

     

     

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