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).

 

Stocks bounced back big in the first quarter, with the Dow, S&P 500, and Nasdaq all pacing for double-digit percentage gains in the first three months of 2019, following their worst quarterly performances in years at the end of last year. While the price action has been more mixed in March -- with tech shares turning in a strong performance -- all three indexes are tracking toward weekly wins, as upbeat U.S.-China trade headlines overshadow this week's uncertainty around sinking bond yields.

Apple Slumps After Streaming Event

Tech stocks lost some of their shine in the last week of the month, with Apple (AAPL) stock consolidating some of its recent gains. The shares are set for just their third weekly loss of the year, as traders sold the news on Monday's streaming event. Elsewhere in the FAANG sphere, Alphabet (GOOGL) is set to wrap up its worst week since late December -- and could be headed for even bigger losses next month.

Not all of the week's tech action was negative, with Nvidia (NVDA) set to extend its weekly winning streak to three thanks to a well-timed bull note. Plus, F5 Networks (FFIV) is headed toward its first weekly win of the month on a Piper Jaffray upgrade, and Qualcomm (QCOM) popped on a legal win -- though history says it's time to drop the stock.

Big Weeks for Bed Bath & Beyond, PVH

Retail stocks remained in the limelight, with Bed Bath & Beyond (BBBY) logging its best day in years on activist investor chatter -- sparking a rush in options activity. PVH Corp (PVH), meanwhile, was the best stock on the SPX Thursday after earnings, while earnings reactions for Lululemon (LULU) and Five Below (FIVE) rewarded options bulls. On the other end of the spectrum was Conn's (CONN), which sparked a short-sale restriction after earnings.

Best Stocks to Trade Right Now

With the month and quarter wrapping up, traders may be looking ahead for stocks to trade in seasonally strong April, as well as the second quarter. While this blue chip has been one of the best to own next month, this FAANG stock tends to turn in a strong second-quarter performance. Citigroup, meanwhile, could be ready to bounce from this bullish trendline, while this Chinese stock just sent up a buy signal.

Trade Talks, Jobs Data in Focus

The economic calendar is busy next week, with the March jobs report the marquee event. Wall Street will look to several Fed speeches for clues on the health of the global economy. Additionally, U.S.-China trade talks will continue in Washington, while buzz over first-quarter earnings season will likely build, with results slated to begin pouring in mid-month.

Yesterday's earnings beat from Tommy Hilfiger parent PVH (PVH) created a halo lift for sector peer Hanesbrands Inc. (NYSE:HBI), which has extended this positive price action in today's trading -- up 1.2% at $17.93 -- pacing for its fourth day in the black. The stock is up 43.2% year-to-date, and back atop its 200-day moving average after a brief dip below this familiar area of support. What's more, HBI tends to shine next month, showing up on Schaeffer's Senior Quantitative Analyst Rocky White's list of best stocks to own in April. 

Looking at the data, the clothing concern has ended the month higher 80% of the time over the past 10 years, averaging a gain of 10.8%. A similar move from where the stock currently sits would have HBI charting territory not seen since its early August bear gap. 

The door is wide open for analysts upgrades, should the security extend its run higher. Currently only two "strong buy" ratings are on the table, while eight analysts have slapped HBI with a cautious "hold." Plus, the consensus 12-month target price of $19.15 is a measly 7% premium to current levels. 

Short sellers are already starting to hit the exits, though, with short interest down 15.5% in the last two reporting periods. However, there's still plenty of room for more short covering. The 32.88 million shares currently sold short represents a solid 9% of the stock's available float, or nearly seven days' worth of trading, at HBI's average volume. 

Some remaining shorts may be hedging with options against any additional upside risk. Over seven calls have been bought for every put on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) during the past two weeks, albeit amid low absolute volume. Plus, this ratio sits higher than 76% of all other readings from the past year. This means, there's been a healthier-than-usual appetite for calls over puts over late. 

While Google parent Alphabet (GOOGL) has been one of the worst stocks to own in April, historically, another FAANG stock could shine soon: Amazon.com, Inc. (NASDAQ:AMZN). According to data from Schaeffer's Senior Quantitative Analyst Rocky White, the e-tail behemoth has ended the second quarter higher 80% of the time over the past 10 years, averaging a gain of 8.53% -- making it one of the best stocks to own over the next three months, if history repeats.

Since touching an annual low of $1,307 on Dec. 24, the shares of Amazon have rallied close to 35%, and recently climbed back atop their 200-day moving average. The equity has spent most of March consolidating its gains atop the $1,750-$1,760 region -- an area that capped rally attempts in late 2018. At last check, AMZN was down 0.4% to trade at $1,758.54 -- a similar second-quarter rally from current levels would put the FAANG stock around $1,908.54, in territory not charted since early October.

Wall Street is certainly betting on an extended Amazon recovery. The security boasts 26 "buy" or better ratings from analysts, compared to one "hold" and not a single "sell." Plus, the consensus 12-month price target of $2,074.67 stands in still uncharted territory for AMZN shares.

Echoing that, options buyers have been much more bullish than usual in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 1.47 is in the 98th percentile of its annual range. This points to a much healthier-than-usual appetite for long calls over puts on the FAANG name in the past two weeks.

Peak call open interest in the front-month series lies at the April 1,700 strike, home to more than 5,000 contracts outstanding. With AMZN trading well north of this level, it's unlikely the security will run into any options-related resistance in the near term.

Tomorrow Wall Street will have earnings releases from CarMax, Inc (NYSE:KMX) and BlackBerry Limited (NYSE:BB). Both reports are due out before the opening bell, and volatile moves are expected from KMX and BB shares. Let's take a look at how traders have been approaching the stocks.

For KMX, its recent earnings history has been mostly upbeat, with six of the past eight earnings reactions going to the upside. On average, the shares have swung 4.7% the day after reports during the past two years, but this time the options market is pricing in a move double that of 9.5%.

Ahead of earnings, there's been a huge increase in interest for long puts, suggesting traders are betting on a move lower from the car sales specialist. The 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at 3.51, ranking in the 88th annual percentile. Similarly, its Schaeffer's put/call open interest ratio (SOIR) comes in at 4.39, only 5 percentage points from an annual high, showing put open interest more than quadruples call open interest among contracts expiring within three months.

This put-skew is due to recent increases at the April 57.50, 58, and 61 puts, with most of the trades occurring at the ask price. These three contracts are now the top open interest positions for CarMax. The weekly 3/29 59-strike put also saw a large rise in open interest during the past 10 days.

On the charts, the security is trading at $63.77, recently pushing past the 80-day moving average and a trendline connecting lower highs since late October. The equity will now face off with the $65-$70 area that blocked its last two breakout attempts.

Hitting BB next, we have data on the last five earnings releases, and three of the reactions for the stock have been positive. On average, the shares have moved 7.3%, and this time the options market is expecting an almost 11% swing in either direction for Friday's trading.

While the options activity on KMX has been put-heavy, BlackBerry speculators have loaded up on calls. For instance, the SOIR for the tech issue stands at 0.22, showing that call open interest is almost five times that of put open interest among near-term contracts. Moreover, this reading ranks 2 percentage points from a 52-week bottom.

On the charts, BB shares have turned lower after running into their 200-day moving average, checking in at $8.71, at last check. Their 2019 advance of 22.5% sounds impressive, but like many stocks, that's coming off a late-December low, skewing the year-to-date return.

 

Qualcomm, Inc (NASADQ:QCOM) is slightly lower in afternoon trading, last seen down 0.9% at $56.41. The shares have struggled long-term, falling sharply since a September peak near $76. While they've been gaining in recent weeks, they're approaching potential resistance in the overhead 200-day moving average, and according to Schaeffer's Senior Quantitative Analyst Rocky White, QCOM is one of the 25 worst S&P stocks to own in April.

Digging deeper, Qualcomm stock has finished eight of the past 10 Aprils in negative territory, averaging a loss of 2.67%. This is quite a notable fall, and another move of this magnitude could push QCOM shares back below the $55 mark -- back to the level of its November through January rut.

Looking toward options shows a seemingly bullish bias, however. QCOM's Schaeffer's put/call volume ratio (SOIR) of 0.68 ranks in the low 33rd percentile of its annual range. In other words, an unusual preference toward short-term Qualcomm calls is currently seen from speculators.

Lastly, the stock's Schaeffer's Volatility Scorecard (SVS) stands at a 96 out of a possible 100. This means QCOM has tended to make outsized moves over the last year, compared to what the options market had priced in.