Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Apr 12, 2023 at 1:01 PM
  • Earnings Preview

American Airlines Group Inc (NASDAQ:AAL) is off by 9% to trade at $13.03 today, after the company slashed its first-quarter profit outlook ahead of earnings. American said it anticipates earnings per share to land between one and five cents, as higher costs provide headwinds. The airline giant will step into the earnings confessional before the market open on Wednesday, April 19.

Options traders are responding in kind, with 101,000 calls and 95,000 puts traded so far today -- volume that's triple the average intraday amount. Most popular is the May 14 call, while new positions are being opened at the weekly 4/14 13.50-strike call.

This uptick in bullish volume is a change from what the equity has seen over the past two weeks. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), American Airlines stock carries a 10-day put/call volume ratio of 1.78 that sits higher than all other readings from the past year.

Over the past eight quarters, the stock has logged post-earnings moves to the downside five times, though it did jump slightly following its January report. On average, AAL averages a 3.5% move --regardless of direction -- the day after earnings over the past two years.

Now on track to snap a three-day win streak, the shares are heading for their worst single-session decline since June 2022, and their lowest close since Jan. 4. And while AAL is holding onto its year-to-date breakeven level, the stock remains off by more than 24% over the last 12 months. 

AAL Chart April 122023

Published on Apr 12, 2023 at 12:04 PM
Updated on Apr 12, 2023 at 12:11 PM
  • Midday Market Check
Published on Apr 12, 2023 at 10:59 AM
  • Intraday Option Activity
  • Buzz Stocks
Published on Apr 12, 2023 at 10:54 AM
  • Analyst Update

The shares of Shopify Inc (NYSE:SHOP) are up 6.2% at $42.57 at last glance, after an upgrade from JMP Securities to "outperform" from "market perform." The firm cited the potential for gross merchandise value (GMV) growth, with new products that will diversify its clientele, and noted that the company's investments in Shopify Fulfillment Network (SFN) are less than feared. 

Today's bull note comes just one day after Needham initiated coverage with a "hold" rating and Baird began coverage with an "outperform." There are now 50 analysts covering SHOP, with 20 a "buy" or better, 27 a "hold," and three a "sell" or worse. The 12-month consensus price target of $49.48 is a slim premium to current levels. 

On the charts, today's pop has Shopify stock breaking above its 320-day moving average for the first time since January 2022. The shares' 100-day trendline has stepped up as support over the past few months. Year-to-date, the equity is up 37%. 

Options traders are chiming in amid the bull note, with 114,000 calls and 27,000 puts exchanged so far -- six times the intraday average volume. The April 50 call is the most popular, with new positions being opened there. 

These options are reasonably priced at the moment too, per SHOP's Schaeffer's Volatility Index (SVI) of 51%, which sits in the low 4th percentile of its annual range. This means options traders are pricing in low volatility expectations at the moment. 

Published on Apr 12, 2023 at 10:36 AM
Updated on Apr 12, 2023 at 10:50 AM
  • Analyst Update

Morgan Stanley upgraded software concern MongoDB Inc (NASDAQ:MDB) stock to "overweight" from "equal weight" and hiked its price target to $270 -- a 27.6% premium to last night's close.

In its bull note, the analyst said it sees a "pivot to profitability," saying its macro concerns have been addressed and citing the company's market leadership. In addition, Morgan Stanley said MongoDB could benefit from new artificial intelligence (AI) advancements and cloud migration.

MongoMD stock is surging this morning, last seen up 9.9% to trade at $232.50. The equity's most recent pullback was saved by support from the 120-day moving average, and today's pop could put MDB back above its 200-day trendline. Year-to-date, the security sports a more than 14% lead. 

Options volume is picking up this morning, and running at five times the intraday average amount. New positions are opening at the top five contracts, led by the April 235 call.

Those looking to speculate with options can do so for a bargain at the moment. This is per MongoDB stock's Schaeffer's Volatility Index (SVI) of 61%, which ranks in the low 9th percentile of annual readings. Plus, the security's Schaeffer's Volatility Scorecard (SVS) sits at a 72 out of 100, meaning MDB stock has exceeded option traders' volatility expectations during the past year -- a good thing for options buyers. 

Published on Apr 12, 2023 at 9:27 AM
  • Opening View

Dow Jones Industrial Average (DJIA) futures are up 249 points this morning, after March's consumer price index (CPI) reading rose by 0.1%, which is slightly lower than economists' anticipated 0.2% rise. Futures on the Nasdaq-100 Index (NDX) also sport a triple-digit lead, while S&P 500 Index (SPX) futures stand in the black as well. 

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

  • Why bulls should keep an eye on T-Mobile stock.
  • Analyst predicts strong sales for this biotech concern.
  • Plus, 3 stocks getting analyst praise before the bell.

futures Chart April 122023

5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw more than 1.1 million call contracts and 618,742 put contracts traded on Tuesday. The single-session equity put/call ratio fell to 0.56 and the 21-day moving average stayed at 0.78.
  2. Shopify Inc (NYSE:SHOP) stock is 4.5% higher in premarket trading, after JMP upgraded it to "market outperform" with a $65 price target -- a 45.1% premium to yesterday's close. Year-to-date, SHOP is up 29%.
  3. Shares of MongoDB Inc (NASDAQ:MDB) are 3.1% higher before the bell, after a bull note from Morgan Stanley. The analyst upgraded MDB to "overweight" and raised its price target to $270, while praising the software concern's leadership in cloud optimization initiatives. MongoDB stock is 7.5% higher in 2023.
  4. JPMorgan Securities reaffirmed its "overweight" rating on MGM Resorts International (NYSE:MGM) and lifted its price target to $55. The brokerage firm cited the casino giant's events calendar as a potential growth catalyst. Up 1.3% ahead of the open, MGM Resorts stock is adding to its nearly 30% year-to-date lead.
  5. The Federal budget balance and federal open market committee (FOMC) meeting minutes are both slated for release today.

Buzz 0412

International Markets Respond to New Economic Data

Asian markets finished mostly higher, as investors unpacked economic data abroad and stateside. South Korea’s employment rate rose by 0.1% to 2.7%, while Japan’s producer price index (PPI) jumped a higher-than-expected 7.2% year-over-year. Hong Kong’s Hang Seng posted the only loss, dropping 0.9% on the day. Japan’s Nikkei added 0.6%, China’s Shanghai Composite tacked on 0.4%, and the South Korean Kospi rose 0.1%.

Markets in Europe, meanwhile, are higher at last glance. London’s FTSE 100 is up 0.6%, while the French CAC 40 and German DAX rise 0.4% and 0.2%, respectively. Yesterday’s global growth report from the International Monetary Fund is still on traders’ minds. 

Published on Apr 12, 2023 at 8:00 AM
  • Indicator of the Week
Published on Apr 11, 2023 at 4:29 PM
  • Market Recap

The major indexes extended their shaky trading, with the blue-chip index logging its fourth-straight daily gain. Recession fears ahead of tomorrow's March inflation reading pushed the Nasdaq and S&P 500 lower, after both struggled for direction most of the day. CarMax (KMX) made noise after earnings as well, while oil snuck back above its round $80 mark. 

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

  • Dating stock edged higher on analyst praise.
  • Blue-chip bank prepares for earnings.
  • Plus, surging biotech concern; telecom stock to watch; and bulls blast WW International stock.

Closing Indexes Summary April 11

NYSE and Nasdaq Stats April 11

 Things to Know Today 

  1. Ford Motor (F) is investing in its Ontario, Canada plant, putting $1.3 billion toward transitioning it to foster electric vehicle (EV) production. The company hopes to release its own line of EV within the next decade. (CNBC)
  2. During its annual Vaccine Day, pharmaceutical leader Moderna (MRNA) revealed it is working on a vaccine for Lyme disease, which is contracted through infected tics and causes a myriad of severe symptoms. (MarketWatch)
  3. Options traders flocked toward biotech powerhouse.
  4. Telecomm stock dialed in right now.
  5. Bull note blasted WW International stock.

Corporate Earnings April 11

Unusual Options Activity April 11

Oil Clears Multi-Month Peak

Oil closed at a multi-month high following yesterday's lackluster performance and traders eye tomorrow's data release. For the session, May-dated crude added $1.79, or 2.2%, to close at $81.53 per barrel -- its highest mark since Jan. 23.

For a sixth-straight day gold finished above the $2,000 mark, following a supportive U.S. dollar. June-dated gold still tacked on $15.20 or 0.8%, to settle at $2,019 an ounce today.

Published on Apr 11, 2023 at 3:20 PM
  • Intraday Option Activity
  • Buzz Stocks
Published on Apr 11, 2023 at 12:27 PM
  • Options Recommendations
Published on Apr 11, 2023 at 12:13 PM
  • Midday Market Check
Published on Apr 11, 2023 at 12:10 PM
  • Earnings Preview

JPMorgan Chase & Co (NYSE:JPM) will report first-quarter financial results before the open on Friday, April 14. The blue-chip bank concern has a disappointing post-earnings past, ending six of its last eight next-day sessions in the red. Regardless of direction, JPM averaged a 2.9% next-day return, which is lower than the 4.8% swing options players are pricing in this time around.  

Last seen up 0.6% to trade at $128.64, JPM has suffered alongside other major banks after the collapse of SVB Financial Group (SIVB). The equity recently dipped below its 200-day moving average, and though it's trading back above this trendline, it remains down on a year-to-date and year-over-year basis. JPMorgan Chase stock is now outpacing the Financial Select Sector SPDR Fund (XLF), though, and history suggests the battered sector is due for a rally.

JPM Chart April 112023

There has been an uptick of bullish activity in JPM's options pits. This is per the stock's Schaeffer's put/call open interest ratio (SOIR), which ranks in the low 19th percentile of annual readings. This suggests short-term options traders have rarely been more call-biased.

Analysts are similarly optimistic, with 13 of 19 in coverage rating JPMorgan Chase stock a "buy" or better. Plus, the 12-month consensus target price of $151.70 is an 18% premium to JPM's current perch.

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