Berenberg this morning called out United Parcel Service, Inc. (NYSE:UPS) for having a strong global presence, and said it's "increasingly confident that it will deliver margin improvement in both its international business and U.S. this year." As such, the brokerage firm handed UPS an upgrade to "buy" from "hold," and tacked on $5 to the former $125 price target, now set at $130. In response, United Parcel Service stock is 1.5% higher at $113.47, at last check.

UPS is now set to close above its 320-day moving average for the first time since October. Prior to today, the shipping stock had encountered a ceiling of resistance at $112 in 2019, but just wrapped up its best quarter since 2013.

Berenberg's bull note comes as a bit of a rarity for the stock, with nearly 67% of covering firms sporting tepid "hold" or worse ratings. Further, UPS' average 12-month price target of $117.30 is in line with current levels. Additional upgrades or price-target hikes could push the shipping stock even higher..

Meanwhile, those wanting to speculate on UPS' short-term trajectory should consider options. The stock's Schaeffer's Volatility Index (SVI) of 17% sits in the 6th percentile of its annual range. In other words, near-term options are attractively priced at the moment, from a historical volatility perspective. 

Lastly, the equity's Schaeffer's Volatility Scorecard (SVS) stands at a lofty 93 (out of a possible 100). This means United Parcel Service stock has tended to make outsized moves over the last year, compared to what the options market had priced in -- a potential boon to premium buyers.

Maryland-based orphan disease specialist Cerecor Inc (NASDAQ:CERC) has flown under the radar of analysts. At last Friday's close, just one analyst covered the biopharmaceutical stock, maintaining a "strong buy" rating and $9 price target.

Earlier today, though, H.C. Wainwright initiated coverage on CERC stock with a "buy" rating, and $11 price target -- a more than 88% premium to last week's settlement at $5.84. This follows news from early March that Cerecor and H.C. Wainwright entered into an underwriting agreement.

In reaction, CERC shares are trading up 0.5% at $5.87, extending a recent bounce off its 50-day moving average, and pacing for a third straight win. Longer term, the equity surged 80.8% in the first quarter, marking its best quarter performance since the fourth quarter of 2017, when it gained 276.4%.

Amid this rally, short sellers have been ramping up their exposure. Short interest jumped 33.9% in the two most recent reporting periods. However, the 352,919 Cerecor shares sold short represents just 1.1% of the equity's available float, or 2.3 times the average daily pace of trading.

Microsoft Corporation (NASDAQ:MSFT) is less than two weeks removed from its March 21 record high of $120.82. Amid MSFT's climb up the charts, call options have been flying off the shelves lately.

In fact, the equity showed up on Schaeffer's Senior Quantitative Analyst Rocky White's list of stocks that have attracted the highest total options volume during the past 10 days, with names highlighted in yellow new to the list. Per the chart below, 579,526 MSFT calls were exchanged over this two-week time frame, as opposed to 408,075 calls.

Today, Microsoft calls are handily outnumbering puts. Roughly 70,000 calls have crossed the tape, compared to 45,800 puts -- with total options volume almost double the average intraday amount. Most active are the weekly 4/12 119- and 124-strike calls, as well as the weekly 4/26 120- and 126-strike calls, and spread activity is detected at all four.

Microsoft sports relatively inexpensive short-term option premiums right now. The stock's Schaeffer's Volatility Index (SVI) of 17% is higher than just 6% of all other readings from the past year, suggesting MSFT's near-term options are pricing in relatively low volatility expectations at the moment.

Since 2008, there have been four other times when MSFT shares were within 2% of a 52-week high and simultaneously sported an SVI in the bottom 20% of its annual range. After those signals, the stock was higher one month later 75% of the time, averaging a gain of 1.56%, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. While that may not seem like much, a pop from its current perch of $118.64 would put Microsoft stock at $120.49, a chip-shot away from that March 21 record high.

The first quarter of 2019 is in the books. The S&P 500 Index (SPX - 2,834.40) logged an impressive 13% advance, following a lousy fourth quarter that saw the index lose 14%. In case you missed Schaeffer's Senior Quantitative Analyst Rocky White's Indicator of the Week commentary last Wednesday, he discussed the historical implications of "bounceback" quarters like we saw in the first quarter. The sample size is small, as one would expect, but the expected future returns are big, per the table below. For more details and perspective on this, you can click on the embedded link.

"...U.S. investors added a net of $14.2 billion into domestic stock funds over the last two weeks, the most over a two-week span since the net $17.4 billion invested in late January 2018. Domestic stock funds have brought in a net of $715 million over the 11 full weeks of the year to date... World stock funds, meanwhile, continued a five-week streak of shedding assets, dropping a net of $3.6 billion last week... For the year to date, world stock funds have brought in a net of $4.4 billion... Bond funds overall added a net of $10.6 billion in assets last week, continuing a streak of positive inflows over every full week of 2019. Since the start of January, bond funds have garnered a net of $104.1 billion."
-- Reuters, March 27, 2019

Despite a robust start to 2019, there is hardly enthusiasm for the rally in U.S. stocks, based on fund flows data. Per the bold text (mine) in the Reuters excerpt immediately above, net inflows into domestic stock funds tallied less than $1 billion in the first 11 weeks of 2019. Investors favored world stock funds, but were most enamored with bond funds, as inflows into domestic stock funds were less than 1% of the year-to-date $104 billion of inflows into bond funds. This data reflects that a slowdown in U.S. growth and earnings is expected -- which bulls should embrace, as lower expectations translate into lower odds for negative surprises down the road.

Moreover, if growth and earnings come in higher than expected, cash could come back into U.S. stocks, building on the historical returns that have followed "bounceback quarters" as we move into the rest of 2019.

Most of the SPX's gains came in the first two months of the year, with the SPX hitting a speed bump in the 2,800-2,820 area in late February. While inflows into stock funds began picking up two weeks ago, there is evidence that deeper-pocketed market participants have reduced exposure in recent weeks.

For example, the combined buy-to-open put/call volume ratio on the three major U.S. equity exchange-traded funds -- the SPDR S&P 500 ETF Trust (SPY), Invesco QQQ Trust (QQQ), and iShares Russell 2000 ETF (IWM) -- is rolling lower, in a sign that the hedging activity that usually coincides with hedge funds accumulating equities is waning.

Furthermore, survey data from the National Association of Active Investment Managers (NAAIM) shows active managers reducing their exposure to stocks.

"...the SPX's 2,800 level is on the radar of many chartists as a potential resistance area -- a level that is now very much in view. This is an important level, as it is a round number and the site of the past highs as I mentioned last week. But if indeed a short-term top or a hesitation in the upside momentum occurs, I would find it interesting if it occurred at 2,820 -- a level that is a round 20% above the December closing low, and not on the radar of many as a potential hesitation point."
-- Monday Morning Outlook, February 25, 2019

The SPX's hourly chart below is a nice visual of the major sideways action that has been present for more than a month. I brought up the possibility of profit-taking or a decrease in potential buyers in late February, as significant selling emerged around the 2,800 level multiple times in 2018 and, as such, this was a key level on the radar of many technicians. Also, with the 2,820 level situated 20% above the December 2018 closing low, such round-number percentages above a major pivot point would likely inspire profit taking or give potential buyers pause.

The bad news for bulls is that the January-February momentum has stalled, but there are silver linings worth discussing.

First, the early March pullback from the 2,800-2,820 area was not nearly as vicious as the declines that ranged from 6% to 16% in only a few weeks in 2018. These sell-offs occurred in the context of the Fed raising rates and anticipating more hikes in 2019, as growth worries and macro uncertainties were front-and-center on investors' minds.

In contrast, the present sideways action in the 2,800-2,820 range occurs in the context of the same growth and macro uncertainties, but the Fed has held rates steady twice this year, and changed their outlook to no rate hikes this year. In other words, a "Fed tailwind" is balancing a growing consensus that earnings and economic growth are poised to slow, and has created more stability at current SPX levels relative to last year.

Moreover, the winds favor bulls in the month following decisions to hold interest rates steady, as the Federal Open Market Committee (FOMC) did on March 20. The table below displays the SPY action in the calendar month following a rate hike versus a rate hold since the tightening cycle began in December 2015. Since the March 20 decision, the SPY had closed above the pre-FOMC decision day close of $282.40 only once, prior to Friday's close above this level.

The biggest risk to the bull case continues to be the positioning of wrong-way Cboe Volatility Index (VIX - 13.71) futures players, who are nearing an extreme in the short volatility trade, per the latest Commitments of Traders (CoT) data. Unfortunately, the timing of this vulnerability -- a VIX spike coincident with a market pullback -- is uncertain. In 2017, the short volatility trade was in place for several months before the VIX eventually exploded higher, while the short volatility futures trade was popular for just two months ahead of the fourth-quarter explosion higher in volatility.

I continue to focus on the 18 level on the VIX as significant, as it is one-half December's closing high. In fact, this level marked two peaks last month. If the VIX moves above 18, there is a heightened chance of stocks suffering a short-term setback as the current short volatility trade is unwound.

Continue reading:

• Indicator of the Week: This Signal Says Now's the Time to Buy Stocks
• The Week Ahead: March Jobs Report, Walgreens Earnings Due for Release

The Dow is up triple digits this afternoon on U.S.-China trade talk optimism. Among the stocks making big moves higher today are construction name Eagle Materials Inc (NYSE:EXP), entertainment stock Chicken Soup For The Soul Entertainment Inc (NASDAQ:CSSE), and energy concern NextDecade Corp (NASDAQ:NEXT). Below, we'll take a closer look at the shares of EXP, CSSE, and NEXT.

EXP Scales NYSE on Sachem Head Stake

Eagle Materials stock is up 13.6% to trade at $83.32, one of the best stocks on the New York Stock Exchange (NYSE) today, after hedge fund Sachem Head Capital Management disclosed a 9% stake in the company. In an SEC filing, Sachem called EXP shares "undervalued," and cited plans to "engage in discussions" with the board and management regarding EXP's strategy going forward.

On the charts, EXP has now broken out above a trendline connecting its series of lower highs going back to last June. The shares are also poised to topple their 200-day moving average on a daily closing basis for the first time since late July. 

EXP's usually quiet options pits have come to life today. At last check, over 3,500 calls have changed hands -- five times the average intraday amount, and nearly six times the number of puts traded. Leading the charge is the newly in-the-money April 82.50 call, where new positions are being opened. 

CSSE Eyes Best Day Ever on Sony Crackle Deal

This morning, Chicken Soup for the Soul Entertainment announced a deal with Sony Pictures to form video streaming service Crackle Plus. CSSE will be the majority stakeholder of the joint venture, which is expected to have a combined audience of nearly 10 million monthly active users.  In response, CSSE is up 17.5% to trade at $10.65, after earlier nabbing a fresh all-time high of $11.99. The equity is on track for its best day ever, and extends its 12-month lead to 58.2%. 

It seems analysts have been bracing for such a meteoric rise. All three of the brokerages covering CSSE rate it a "buy" or better, and its consensus 12-month price target of $19.50 is an 83.1% premium to its current perch.

NEXT Analysts Could Shift Stance

One of the better stocks on the Nasdaq today is NextDecade, up 15.6% to trade at $5.85. The liquefied natural gas (LNG) company teased a "major announcement" next Tuesday at LNG2019 in Shanghai -- one that Cowen suspects will be the signing of a new customer.

NEXT has now gained nearly 86% from its mid-February lows at $3.15, and is on track to extend its winning streak to an impressive seven days. The shares are about to take out their 200-day moving average, too, for the first time on a daily closing basis since late August.

Unlike CSSE, NextDecade stock could certainly benefit from a shift in analyst sentiment. All seven of the brokerages tracking the stock rate NEXT either a "hold" or "strong sell," and its average 12-month price target of $5.57 is a discount to its current perch. 

Chinese tech giant Alibaba Group Holding Ltd (NYSE:BABA) is trading up 1.5% before the open, thanks to bullish analyst attention out of Baird. The brokerage firm lifted its price target to $195 from $178, citing what it sees as an undervalued asset in Alibaba's Lazada e-commerce business. Baird pointed to Lazada's footprint in Southeast Asia, a region it deemed the next "major battleground for e-commerce" and a huge growth opportunity due to its large population.

To be sure, most of Wall Street is already very bullish on BABA stock, with 21 of 22 covering firms recommending to buy it. Similarly, the consensus 12-month price target is $204.69. The shares traded as high as $211.69 back on June 5, but pulled back all the way to the $130 area by the end of 2018. So far in 2019, the equity has been on the rise, closing Thursday at $177.73.

There's been little interest from the options pits lately, with put and call open interest both holding near 52-week lows. What's more, the stock's 30-day at-the-money implied volatility of 25% ranks just 2 percentage points from an annual low. In other words, speculators are pricing in relatively low volatility expectations for near-term contracts. With that in mind, it's also worth noting that Alibaba has a Schaeffer's Volatility Scorecard (SVS) of 90 out of a potential 100, showing a strong tendency to surprise the options market with outsized moves.

Stocks have rebounded nicely since a disastrous fourth quarter in 2018. The S&P 500 Index (SPX) fell 14% in the final three months of last year. The index has made up most of that, gaining over 12% this year, with a few more days to go in the first quarter. This week, I'll look at prior instances when the index lost double digits in one quarter just to gain double digits the next quarter, to see if the upward momentum tends to persist.

Historical S&P Returns By Quarter

First, the tables below show how the quarters have generally performed over different time periods. Going back to 1970, the second quarter has been adequate, averaging about a 2% return, and positive 61% of the time. Since 2000, the second-quarter average is the second best, after the fourth quarter, but it has been the least likely to be positive, with only 58% of the returns positive. Looking at just the bull market since 2010, the second quarter has in fact struggled. It has averaged a slight loss, with just five of nine quarters positive.

Breaking Down S&P Bounceback Quarters

The table below shows each quarter in which the S&P 500 Index gained at least 10% after the prior quarter lost at least 10% since 1950. The momentum looks likely to continue. The three prior occurrences saw these double-digit quarters, followed by another double-digit quarter. Five of the six next quarterly returns were positive. The one time the S&P 500 fell, however, it was look out below -- stocks were down over 20% a year later.

The table below summarizes the six returns after bounceback quarters. I also show anytime returns since 1970 -- the year of the first bounceback quarter. The next quarter has tended to be very strong, averaging an 8.5% return. The return over the next two quarters also outperforms handily, averaging a 10.5% return, with five of six returns positive. The one-year returns aren't too impressive, so now might be the time to buy in.

The Best and Worst Second-Quarter Stocks

If you're searching for stocks to play, below is a list of S&P 500 stocks that have had positive second-quarter results over the past 10 years. It's the best 25 stocks sorted first by percent positive, and then by average return.

Finally, here's the list of S&P 500 stocks that have performed the worst over the past 10 years.

Pharmaceutical concern Seelos Therapeutics Inc (NASDAQ:SEEL) is at the top of the Nasdaq after announcing its 2019 plans. The company anticipates it will dose the first patient with the life-threatening spinal disease Sanfilippo syndrome in a mid-stage trial with the company's experimental Trehalose treatment in the second quarter. The company also announced an early stage study of its ketamine PTSD treatment this summer. As a result, the shares are up 27.3% at $3.64.

SEEL stock has been struggling to rally atop the $4 mark for some time, as level that has acted as a ceiling for the shares. The equity bottomed out at an all-time low of $1.45 on Mar. 4, before nearly doubling later that week. SEEL has since pulled back for these highs, with downward pressure recently emerging at its 40-day moving average. However, today's jump has the penny stock breaking north of its 50-day trendline for the first time since its intraday spike on Mar. 8. 

Short interest has skyrocketed on the stock in 2019, up over 1,400%. Shares sold short now represent a quarter of the stock's available float. Should these bearish bets begin to unwind, some additional tailwinds could help SEEL on its next leg higher. 

Galapagos NV (NASDAQ:GLPG) and Gilead Sciences, Inc. (NASDAQ:GILD) stocks are higher this morning, after the companies reported positive data for a jointly developed drug to treat moderate-to-severe rheumatoid arthritis (RA). An analyst at SVB Leerink believes the the drug could be launched by 2020, while H.C. Wainwright has come forward with a price-target hike for GLPG to $150 from $136. 

Galapagos stock is benefiting the most from the news, up 16.7% to trade at $112.28, on track for its best day ever. The shares have now broken out above their 160-day moving average, a trendline that's kept a lid on recent rally attempts, and are now pacing toward their highest close since Oct. 1. Year-to-date, the equity is up 21.9%.

A capitulation from some of the weaker bearish hands could keep the wind at GLPG's back. Short interest increased by 23% in the most recent reporting period to 1.05 million shares, a new record high. At the security's average daily trading volume, it would take nearly nine days for shorts to buy back their bets. 

Looking at Gilead Sciences, the stock is up 2.6% to trade at $65.36. Since briefly crossing the $70 level in late January, GILD has carved out a channel of lower highs and lows, guided by its descending 80-day moving average. 

In the options pits, calls reign in popularity. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows speculative players have bought to open 11,495 calls in the last 10 sessions, compared to just 3,310 puts.

Meanwhile, GILD's Schaeffer's Volatility Index (SVI) of 22% sits in only the 12th percentile of its annual range. From a volatility perspective, this implies that front-month options are unusually cheap at the moment.

Analysts this morning waxed optimistic on biotech stocks Xenon Pharmaceuticals Inc (NASDAQ:XENE), TG Therapeutics Inc (NASDAQ:TGTX), and Viking Therapeutics Inc (NASDAQ:VKTX). In fact, the brokerage firms expect shares of XENE, TGTX, and VKTX to more than double on the charts.

XENE Options Attractively Priced

Xenon stock is up 4.7% to trade at $10.08, after Stifel lifted its price target by $3 to $21 -- more than double Thursday's close. The equity has already rallied close to 60% in 2019, supported by its 20-day and 40-day moving averages. Earlier this month, XENE touched a year-to-date high of $10.74, but stalled around a 50% Fibonacci retracement of its retreat from its September highs to its April lows.

Traders wanting to speculate on XENE's short-term momentum should consider options. The equity's Schaeffer's Volatility Index (SVI) of 90% is higher than just 5% of all other readings from the past 12 months, suggesting near-term options are pricing in relatively low volatility expectations at the moment -- translating into attractive premiums.

Short Squeeze Could Boost TGTX Stock

TG Therapeutics shares are up 4% at $7.76. Cantor Fitzgerald this morning started coverage of TGTX with an "overweight" rating and $17 price target -- more than double yesterday's close. The security gapped higher in late February on upbeat data for the company's lymphoma drug, and has already more than doubled since its Dec. 24 low of $3.32. Today, TGTX is attempting to take on its 200-day moving average, which hasn't been defeated on a daily closing basis since early September.

A short squeeze could certainly help the stock extend its upward trajectory. Short interest represents nearly 27% of the security's total available float, or roughly a week's worth of buying power, at TGTX's average pace of trading.

VKTX Upgrade Brings Option Bulls

Viking Therapeutics stock is up 11.3% at $9.43, as traders cheer an upgrade to "outperform" from "market perform" at SVB Leerink. The brokerage firm also more than doubled its price target on VKTX to $21 from $10, waxing optimistic on the pharma company's non-alcoholic fatty liver disease (NASH) drug. While Viking stock has added nearly 21% in 2019, the shares have struggled to stray far beyond the $9 level so far this year.

VKTX options traders today are scrambling for calls. The pharma stock has already seen more than 3,800 calls change hands in the first hour of trading -- four times the average intraday pace. For comparison, fewer than 200 Viking Therapeutics puts have traded thus far. Most active is the May 10 call, with vanilla buyers expecting VKTX to move into double-digit territory within the next several weeks.

Web application developer F5 Networks, Inc. (NASDAQ:FFIV) is up 2.3% to trade at $157.18, just after landing an upgrade to "neutral" from "underweight" and a price-target hike to $163 from $157 at Piper Jaffray. The firm said its bull note comes despite continued concerns about the company's "longer-term dynamics," but noted the current valuation is "reasonable" and leaves "a more balanced risk-reward profile than six months ago."

On the charts, F5 Networks stock has shed nearly 22% from its late-September high just south of $200, with the stock touching an 11-month low on March 12, due to an M&A-related bear gap. Today, however, FFIV shares are set to conquer their 20-day moving average for the first time this month.

Unsurprisingly, analyst attention has been bearish toward the tech name. Just two of the 14 brokerage firms following FFIV offer up a "strong buy" recommendation, compared to nine carrying a tepid "hold" and three sporting a "strong sell." In the same vein, FFIV's average 12-month price target of $167.77 represents just 7% upside to current levels.

Optimism is more prevalent in the options pits, though, per the security's 10-day call/put volume ratio of 3.19 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands in the 88th percentile of its annual range, suggesting FFIV calls have been bought over puts at a faster-than-usual clip in the past two weeks.

Short-term options on FFIV are attractively priced, too. The equity sports a Schaeffer's Volatility Index (SVI) of 21%, that stands in the low 8th percentile of all other readings from the past year, suggesting near-term options are pricing in low volatility expectations at the moment.

Two stocks that may hold an appeal with the younger generation were met with downbeat attention from the analyst community today. Specifically, music streaming giant Spotify Technology SA (NYSE:SPOT) and high end cooler maker Yeti Holdings Inc (NYSE:YETI) are struggling on the charts today following bearish brokerage notes.

For SPOT, the shares are slightly lower at $137.39, after Credit Suisse began coverage with an "underperform" rating and $120 price target. The firm believes long-term expectations are too high for the company, and the competition from names like Apple, Amazon, and YouTube will make it difficult to meet subscriber growth forecasts.

Most of Wall Street is bullish on Spotify stock. There are 21 brokerages in coverage, and 15 of them say to buy the shares. Moreover, the average 12-month price target stands up at $164.48, almost 20% above current trading levels. The equity traded as high as $198.99 back in July.

YETI stock, meanwhile, was cut to "equal-weight" from "overweight" at Morgan Stanley, which said all the positive news around the shares is now priced in. This comes after the security has more than doubled in the past three months, topping out at $34.43 yesterday. Morgan Stanley did, however, up its price target to $32 from $26. Yeti was last seen trading down 7.1% on the day at $29.63.

Like Spotify, Wall Street loves YETI, since all 10 analysts have "buy" or "strong buy" endorsements. Options traders have seemingly taken an upbeat view, as well. That is, call buying has outpaced put buying 5,809 to 1,439 during the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX).