Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Feb 6, 2023 at 2:15 PM
  • Most Active Options Update
 
Published on Feb 6, 2023 at 1:09 PM
  • Quantitative Analysis
  • Analyst Update

Shares of T-Mobile US Inc (NASDAQ:TMUS) are trending lower today, last seen down 2.1% to trade at $142.18 after MoffettNathanson downgraded the telecom to "market perform" on worries surrounding the company's growth. 

This pullback has TMUS now trading within one-standard deviation of its 160-day moving average -- a trendline that's acted as a springboard in the past. Per data from Schaeffer's Senior Quantitative Analyst Rocky White, the shares averaged a 21-day gain of 4.5% in six of the last seven times a pullback to this trendline occurred. A move of this magnitude would send TMUS stock at $148.58, not far off its Nov. 2 all-time high of $154.37.

TMUS Chart February 62023

On the charts, TMUS remains up more than 17.5% over the last 12 months. Options are an intriguing route, with the stock is seeing attractively priced premiums at the moment, per its Schaeffer's Volatility Index (SVI) of 24%, which sits in the 14th percentile of its annual range. It's also worth pointing out that the equity ranks low on the Schaeffer's Volatility Scorecard (SVS), with a score of just two out of 100. In other words, the security has consistently realized lower volatility than its options have priced in, making the stock a potential premium-selling candidate.

Published on Feb 6, 2023 at 11:49 AM
  • Midday Market Check
 
Published on Feb 6, 2023 at 10:32 AM
Updated on Feb 6, 2023 at 10:32 AM
  • Analyst Update

The shares of Spotify Technology SA (NYSE:SPOT) are rallying, up 56.6% since the start of 2023, with no sign of slowing down according to Wells Fargo. The firm today upgraded the music streaming stock to "overweight" from "equal weight," with a price-target hike to $180 from $121, citing Spotify's commitment to improving its margins. 

At last glance, SPOT was up 2.3% at $124.01. The stock recently broke above several long-term moving averages, with only the 320-day trendline still lingering above. Year-over-year, the equity is down 28.4%. 

There's still plenty of room for optimism amongst analysts, however. Of the 32 analysts in coverage, 18 carry a "hold" or worse rating, while the 12-month consensus price target of $126.53 is just a slim premium to current levels. 

Calls, meanwhile, are much more popular than usual in the options pits. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), SPOT's 50-day call/put volume ratio of 2.34 ranks higher than 97% of readings from the past year. 

Options traders are sticking with this bullish sentiment today, as 5,514 calls have crossed the tape so far -- triple the intraday average amount -- in comparison to 1,085 puts. The weekly 2/10 130- and 125-strike calls are the most popular, with new positions being opened at both. 

Published on Feb 6, 2023 at 10:32 AM
  • Intraday Option Activity
  • Buzz Stocks
 
Published on Feb 6, 2023 at 9:11 AM
Updated on Feb 6, 2023 at 9:17 AM
  • Opening View

Stock futures are extending Friday's slump. At last glance, Dow Jones Industrial Average (DJIA) and Nasdaq-100 Index (NDX) futures are pacing for triple-digit drops, while S&P 500 Index (SPX) futures are also set to open firmly lower. Investors are eyeing Federal Reserve Chair Jerome Powell's speech before the Economic Club of Washington tomorrow, as well as more earnings, with Walt Disney (DIS) and Chipotle Mexican Grill (CMG) to report later this week. 

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

  • Just how strong was the stock market in January?
  • Keep an eye on these 2 FAANG stocks.
  • Plus, SPOT draws analyst praise; layoffs at Dell; and LYFT downgraded.

OV 0206

5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw more than 2 million call contracts and 1.1 million put contracts traded on Friday. The single-session equity put/call ratio rose to 0.57 and the 21-day moving average stayed at 0.80.
  2. Spotify Technology SA (NYSE:SPOT) is drawing analyst attention this morning, with Wells Fargo and Atlantic Equities both upgrading the music streaming giant "overweight." The former praised the company's improving margins. SPOT is already up 53.5% in 2023 and is up 2.7% in premarket trading.
  3. Dell Technologies Inc (NYSE:DELL) became the latest tech giant to announce layoffs. The company will let go of roughly 5% of its workforce, as it struggled with slowing personal computer demand and prepares for a potential recession. DELL is up 1.8% before the open, but down 28.6% year-over-year.
  4. The shares of Lyft Inc (NASDAQ:LYFT) are down 2.7% ahead of the open, after Gordon Haskett downgraded the ridesharing stock to "hold" from "buy." The firm expressed concerns over Lyft's fourth-quarter active rider metrics. LYFT has shed 52.2% over the last 12 months.
  5. There are no relevant economic indicators scheduled for today.

OV Buzz Chart Feb 6

European, Asian Markets Mostly Lower

Stocks in Asia were mostly lower following the Fed decision in the U.S. Japan’s Nikkei was the only winner, adding 0.7%, amid reports that the Bank of Japan (BoJ) has asked its deputy governor Masayoshi Amamiya to take Haruhiko Kuroda’s place in leading the central bank. Due to lagging tech Hong Kong’s Hang Seng led the losses with a 2% drop, while the South Korean Kospi and Shanghai Composite fell 1.7% and 0.8%, respectively.

European markets, meanwhile, are all lower midday, as euro zone bond yields rise while investors contemplate the European Central Bank’s (ECB) future in regard to rate hikes. London’s FTSE 100 is down 0.7% at last glance, while the German DAX falls 0.8%, and the French CAC 40 sheds 1.3%.

Published on Feb 6, 2023 at 9:16 AM
  • Earnings Preview
  • Analyst Update
 
Published on Feb 6, 2023 at 8:51 AM
  • Monday Morning Outlook
 
Published on Feb 3, 2023 at 4:29 PM
  • Market Recap

A strong jobs report once more sparked fears that the Federal Reserve may continue hiking interest rates. The anxiety sent the broader market lower for the day, though the Nasdaq and S& 500 Index both logged strong weekly wins -- the former its fifth straight thanks to an upbeat round of Big Tech earnings. The Dow, meanwhile, closed the week with a marginal loss.

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

  • 'FAANG' stocks to buy and sell this month.
  • How did options traders play the Big Tech earnings reports today?
  • Plus, the best and worst stocks to own in February; revisiting the January Barometer.

closing summary feb3

nyse nasdaq feb3

5 Things to Know Today 

  1. Southwest Airlines' (LUV) COO will answer a Senate panel's questions next Thursday, after the company's catastrophic holiday meltdown. (CNBC)
  2. Here's what to expect after public-health emergencies addressing Covid-19 end on May. (MarketWatch
  3. The 25 best stocks to own this month.
  4. Avoid this beverage stock in February.
  5. Catching up on the January Barometer.

Earnings Feb3UVOL Feb3

Gold, Oil Turn in Weekly Losses

Oil futures slid once again Friday, and logged a modest weekly loss. For the session, March-dated crude fell $2.49, or 3.3%, to settle at $73.39 per barrel, and turned in a 7.9% loss on the week.

Gold prices breached the psychologically significant 1,900 level Friday, after a better-than-expected monthly jobs report boosted Treasury yields and strengthened the U.S. dollar. April-dated gold lost $54.20, or 2.8%, to settle at $1,876.60 per ounce for the day -- their lowest level since Jan. 10. On the week, the safe-haven asset lost 2.7%.

Published on Feb 3, 2023 at 2:18 PM
Updated on Feb 3, 2023 at 2:58 PM
  • 5-Minute Market Rundown

This week saw the market close out a very strong monthly start to the year, as investors focused on the U.S. Federal Reserve's two-day policy meeting and a host of Big Tech earnings. The S&P 500 Index (SPX) closed its best January in four years on Tuesday, while the Nasdaq Composite (IXIC) finished with its best start to the year since 2001. In a widely expected move, the Fed issued a 0.25 percent interest rate hike on Wednesday, though Wall Street still closed with gains.

Facebook parent Meta Platforms' fourth-quarter report was the talk of the town on Thursday, giving the S&P 500 and Nasdaq a boost, though the Dow Jones Industrial Average (DJI) finished with a triple-digit loss. Friday, investors sifted through earnings reports from three other Big Tech giants as well as jobs data, with all three major benchmarks headed for strong weekly wins. 

Big Tech in Focus

Meta Platforms' strong fourth-quarter report had the stock soaring, though it's worth noting that it typically underperforms in February. Meanwhile, options bulls targeted Amazon.com Inc (AMZN) ahead of its report, though many were likely disappointed following the stock's post-earnings reaction. Apple (AAPL) and Alphabet (GOOGL) both posted lower-than-expected earnings, with the former posting a rare top-line sales decline. Analysts and options traders were quick to chime in on all three Friday. 

Notable Analyst Calls

There was plenty of buzz from the brokerage bunch amid the busy week. Goldman Sachs weighed in on three retail stocks, naming Macy's (M) the "best-positioned" in the retail sector going into 2023. Meanwhile Credit Suisse called sentiment surrounding Foot Locker (FL) "overly bearish," while Snap (SNAP) was bombarded with post-earnings bear notes, and two analysts upgraded FedEx (FDX) after its cost-cutting measures

Next Week Slower on Wall Street

After a busy past couple of weeks, economic data is fairly sparse next week, though there will still be plenty of earnings reports. In the meantime, after such a strong start to the year, it's hard not to muse over the January Barometer, a theory that the performance of stocks in January can predict how the rest of the year will turn out.

Published on Feb 3, 2023 at 10:30 AM
Updated on Feb 3, 2023 at 2:02 PM
  • Best and Worst Stocks

The S&P 500 Index (SPX) has roared back to life so far in 2023, and now boasts an 8.9% year-to-date lead. As the best single gauge of large-cap U.S. equities, we're taking a look at the best performing stocks on the SPX for the month of February in the last decade. Aerospace and defense giant Raytheon Technologies Corp (NYSE:RTX) stands out as one of them.

According to Schaeffer's Senior Quantitative Analyst Rocky White, Raytheon Technologies stock sports an average return of 3.8% in the month of February over the last 10 years, and finished the month higher eight times. That's good for not only second-best among Dow members, but second amongst defense stocks.

Best of February 32023

RTX is trading at $97.48 at last check, so a move of similar magnitude would put RTX back above $100. The shares are battling both their year-to-date and year-over-year breakeven levels, but aren't far off their Jan. 24 record high of $108.84.

RTX Chart February 32023

Puts are becoming more popular. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Raytheon Technologies stock's 50-day put/call volume ratio sits higher than 75% of readings from the past year. In other words, long puts are getting picked up at a quicker-than-usual clip in the last two months. 

It's also worth pointing out that the equity ranks low on the Schaeffer's Volatility Scorecard (SVS), with a score of just 14  out of 100. In other words, the security has consistently realized lower volatility than its options have priced in, making the stock a potential premium-selling candidate.

Published on Feb 3, 2023 at 12:05 PM
  • Quantitative Analysis
  • Editor's Pick

Subscribers to Chart of the Week received this commentary on Sunday, January 29.

Layoffs have rocked the tech sector for the last year. ‘Disruptive’ companies that could seemingly do no wrong leading up to the Covid pandemic found themselves laying off sizable chunks of their workforce as revenue growth slowed. It’s left a gruesome scene around Big Tech. Until the dust settles, two "FAANG" stocks – should they be called MAANG now? Or MANGA?! -- at the forefront of the layoff drama should be on your radar, but for vastly different reasons.

While Meta Platforms Inc (NASDAQ:META) has added 69% off Nov. 4 seven-year lows of $88.09, the shares have run right into their -50% year-over-year level, and just above that, their 200-day moving average. This area also coincides with the $400 billion market cap level, the site of 2018 and Covid lows.

META Chart 2023

It could get worse before it gets better, as META also historically underperforms in February. According to Schaeffer's Senior Quantitative Analyst Rocky White, below are the 25 best S&P 500 Index (SPX) stocks to own in February, looking back 10 years. META is second worst on the list, ending the month higher only 30% of the time with an average return of -4.5%.

Worst Stocks February COTW

Why such underperformance in February? Probably earnings. The house Zuckerberg built reports fourth-quarter earnings after the market closes on Wednesday Feb. 1, and META has a history of less-than-stellar post-earnings reactions. Six of the last eight reports have been followed by a downside move, including a 24.6% bear gap in late October, as well as a 26.4% drawdown last February. Overall, the equity averages a post-earnings move of 11.5%, and the options market is pricing in a similar move of 12.8% for Thursday’s trading. Should META suffer another post-earnings bear gap, the 23 of the 36 brokerages in coverage that maintain "strong buy " ratings could be compelled to shift their stance, which would cloud the technical picture even more.

Along with Meta, streaming giant Netflix Inc (NASDAQ:NFLX) was one of the first tech behemoths to begin the layoff process, announcing a 3% reduction back in July. At that time, NFLX was consolidating near its May 12 five-year lows of $162.71. The shares have since tacked on 123% from that bottom, and on Monday gapped past their 320-day moving average for the first time since early January 2022. The equity also reclaimed its year-over-year breakeven level as well as the $150 billion market cap level, the latter of which is half its all-time market cap level of $300 billion. Note the purple trendline drawn below, the channel of higher highs carved from that May bottom.

NFLX Chart 2023

Netflix has already been in the earnings confessional, gapping higher by 8.5% last week on Jan. 19 amid encouraging subscriber numbers. With that potentially volatile hurdle in the rearview mirror, NFLX is entering a historically bullish month. Per White’s list of best 25 SPX stocks to own in February, Netflix tops the list, ending the month higher 90% of the time with an average return of 4.7%.

Best Stocks February COTW

While META and NFLX are flashing very different signals entering February, put traders are crowding both stocks. Their respective 50-day put/call volume ratios at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) rank in the 96th percentile or higher of their annual range, indicating an unusually heavy appetite for long puts of late. Whichever stock you choose to target in February, options are a safe route right now. META’s Schaeffer’s Volatility Scorecard (SVS) checks in at 91 (out of 100), while NFLX’s sits at 75, indicating both shares have shown a tendency to make big moves in the past year, per their volatility expectations.

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