Stimulus negotiations and COVID-19 vaccine news were front and center over the past few days, taking up most headlines as they made up for a volatile week. The Dow and S&P were knocked off record levels on Monday, after a lack of progress in Congress weighed on investors' minds. Regardless, the Nasdaq scored its third-straight gain and an intraday record thanks to the tech sector. Uplifting vaccine news boosted sentiment on Tuesday, as the U.K. became the first country to administer Pfizer's (PFE) coronavirus vaccine, and the U.S. Federal Drug Administration (FDA) said the shot did not present any safety concerns. 

By Wednesday, much of that optimism had faded. The major indexes reversed vaccine-fueled records to finish the day in the red, after Senate Majority Leader Mitch McConnell said lawmakers were “still looking for a way forward" following a $916 billion bipartisan stimulus package proposal. That day, the U.S hit a record of 15 million infections, with an average of 200,000 Americans testing positive for the virus each day. Disappointing jobless claims, as well as a stimulus stalemate, did nothing to help stocks on Thursday. Technology stocks gained, however, as traders waited for the outcome of a FDA meeting regarding the vaccine. As of Friday afternoon, the major benchmarks were headed for weekly losses, with stimulus negotiations going nowhere and a vaccine approval still pending.

Blue-Chip Stocks in the Spotlight

A small handful of blue-chip stocks were in the spotlight this week. For one, JPMorgan Chase (JPM) made it to Schaeffer's Senior Quantitative Analyst Rocky White's list of 25 best stocks to own in December. Cisco (CSCO) was also turning heads, after the tech giant slipped following its acquisition of IMImobile for $730 million, stepping firmly into "overbought" territory. McDonald's (MCD) attracted negative attention as well, moving lower after a downgrade from Stephens to "equal weight" and a price-target cut to $225.

Retail Sector Weighs Mix of Bull, Bear Notes

There was no shortage of retail sector news for investors to unpack, either. On Monday, Ford (F) dropped after it pushed back the launch of its Bronco SUV until summer 2021. Chewy (CHWY), on the other hand, reeled in a slew of bull notes after a third-quarter earnings beat. GameStop (GME) was not so lucky, taking a deep dive after a revenue miss. Meanwhile, a bullish signal flashing for Cotsco (COST) suggested the stock has plenty of room to run. The situation is much more dire for Best Buy (BBY), after Goldman Sachs slammed the retailer with a bear note and said it is "near peak" valuation.

Tech Stocks Struggle with Major Headlines

Yet, the focus this week was heavily on the tech industry. Snap (SNAP) was higher to start off Monday, after consistent attention in the options pits. On Tuesday, however, Uber (UBER) dropped after selling its self-driving unit to a startup competitor. FireEye (FEYE) was not doing so hot, either, following a security breach that resulted in some tools being stolen. Ciena (CIEN) was lower as well ahead of its fourth-quarter earnings report. 

The real pressure was on Facebook (FB), though, when the Federal Trade Commission (FTC) and 48 states filed lawsuits against the social media giant and accused it of anti-competitive practices. And while software giant Adobe (ADBE) reported an earnings win on Thursday, it still couldn't move up the charts. The same can't be said for the surging Fastly (FSLY), which may be an attractive target for options bulls moving forward.

Packed Week Brings Fed Meeting, Manufacturing Data

Traders are looking ahead to December's halfway point, with a handful of major names set to step into the earnings confessional next week, including Lennar (LEN), Carnival (CCL) and Navistar (NAV), as well as FedEx (FDX) and Nike (NKE), to name just a few. In terms of economic indicators, a two-day Federal Reserve meeting will take place. In addition, import price and manufacturing indexes are due out, on top of retail sales, housing starts and inventories data. Until then, brush up on how a big move into equity-based ETFs can drive stocks, and get a sense for how the SPX usually performs during the second half of December.

Welcome back to our weekly series, Schaeffer's Cannabis Stock News Update, where we recap what happened in the world of marijuana stocks this past week and look ahead at the pot stocks to watch as the year closes out.

Investor interest in the cannabis industry continues to grow, and the leading players continue to break through legal barrier after legal barrier. By the end of 2020, it's likely that more than 40 U.S. states will have legalized recreational and/or medical marijuana. As such, more and more companies are starting to see the opportunity in cannabis distribution, suggesting there are many more marijuana initial public offerings (IPOs) on the horizon for the marijuana stock industry.

Here is a quick roundup of a major cannabis stock news last week (Dec. 7 through Dec. 11):

Arena Pharmaceuticals, Inc. (NASDAQ:ARNA), announced on Dec. 8 that it has achieved its targeted enrollment goal of 372 participants in Phase 3 ELEVATE UC 52 trial evaluating the safety and efficacy of once-daily etrasimod, a highly selective, once-daily, oral sphingosine 1-phosphate (S1P) receptor modulator, in participants with moderately-to-severely active ulcerative colitis.

Canopy Growth Corp. (NYSE:CGC), announced on Dec. 9 that it plans to shut down operations across five of its Canadian operations on by Dec. 16, a move that would lay off approximately 220 workers and save up to $200 million annually. Canopy Growth said its indoor facilities in Newfoundland and Labrador, New Brunswick, Alberta, and Bowmanville, Ont. will be closed, as well as its outdoor growing operations in Saskatchewan. The closures reflect about 17% of the company's indoor growing capacity in Canada, and all of its outdoor operations.

Canopy Growth and Arise Bioscience Inc., a wholly-owned subsidiary of TerrAscend Corp. engaged only in the legal sale of CBD products, announced on December 10 that they have entered into a loan financing arrangement for US$20 million under a secured debenture. In connection with the Loan, TerrAscend has issued 2.1 million common share purchase warrants to the Company.

Canopy Growth Corporation (NYSE:CGC) wasn't done though. They also announced on Dec. 8 that the Vitamin Shoppe is the first national retailer to carry the full line of Martha Stewart CBD wellness products – just in time for the busy, and often stressful, holiday season.

cbdMD, Inc. (NYSE:YCBD), announced on Dec. 8 that the pricing of its underwritten public offering of 2 million shares of its 8.0% Series A Cumulative Convertible Preferred Stock at a price to the public of $7.50 per share. cbdMD expects to receive gross proceeds of $15 million from the offering. The closing of the offering is expected to occur on or about Dec. 11, subject to the satisfaction of customary closing conditions. The shares will be convertible into shares of cbdMD’s common stock at the holder’s option at a conversion price of $6.00 per share, or by cbdMD, at a conversion price of $6.00 per share if the trading price of its common stock equals or exceeds $8.25 per share for at least 20 trading days in any 30 consecutive trading day period ending five days before the date of notice of conversion. The shares will not be redeemable before October 2023, except upon the occurrence of a change of control.

Greenlane Holdings, Inc. (NASDAQ:GNLN), a global house of brands and one of the largest sellers of premium cannabis accessories, announced on Dec. 10 that it has renewed its exclusive distribution partnership with PAX Labs, a leading consumer technology brand in cannabis. The agreement maintains Greenlane’s exclusive distribution of all PAX devices throughout the U.S.

Intec Pharma Ltd. (NASDAQ:NTEC), announced on Dec. 9 that it has entered into a feasibility agreement with GW Research Limited, London, the U.K. to explore using the Accordion Pill platform for an undisclosed research program.

22nd Century Group, Inc. (NYSE:XXII), a leading plant-based, a biotechnology company that is focused on tobacco harm reduction,  announced on December 8 that the FDA, in coordination with the National Institute on Drug Abuse (NIDA) and others, has submitted an order to 22nd Century for 3.6 million variable nicotine research cigarettes. The company’s cigarette research will continue to fuel numerous independent, scientific studies to validate the enormous public health benefits identified by the FDA and others of implementing a national standard requiring all cigarettes to contain minimally or non-addictive levels of nicotine.

WM Holding Company, a cannabis technology company which operates the online U.S. platform Weedmaps where users find and rate marijuana sellers, said on December 10 that it has agreed to go public through a merger with Silver Spike Acquisition Corp. The deal to take Weedmaps public, which values the company at around $1.5 billion, is a rare example of a business focused on the cannabis sector listing on a U.S. stock exchange.

Broadcom Inc (NASDAQ:AVGO) is pacing for its third-consecutive loss, just three days removed from a Dec. 8 all-time high close of $423.41, despite posting a fiscal fourth-quarter earnings and revenue beat. Meanwhile, big C-suite changes, with a new Chief Operating Officer and Chief Financial Officer being named, and the issuing of a cautious outlook are impacting the stock. At last check, AVGO is down 2.6% at $399.07. 

Meanwhile, a round of bull notes rolled in following earnings. No fewer than 12 brokerages hiked their price targets, including J.P. Morgan Securities, which lifted its estimate to a street high of $500 from $420. The consensus 12-month price target is now at $453.71, a 13% premium to current levels. Coming into today, 19 of those in coverage called AVGO a "buy" or better, while three called it a "hold."

Today marks the first time the equity is poised to close below the $405 level in a week. As we previously mentioned, AVGO failed its run up against a new high just a few sessions ago, and it's been an impressive run on the charts over the past few months, with long-term support from the ascending 80-day moving average. Even more impressive, Broadcom stock has tacked on 27.3% in 2020. 

Meanwhile, in the options pits, calls have been popular over the last two weeks. This is per AVGO's 10-day call/put volume ratio of 1.35 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 96% of readings in its annual range. This indicates a much healthier-than-usual appetite for long calls of late. Echoing this, short-term players haven't been more put-heavy. The stock's Schaeffer's open interest ratio (SOIR) of 1.60 sits in the 95th percentile of its annual range.

If you've been around the block with us, our contrarian indicators are nothing new. Using a time-tested combination of expectational and quantitative analysis, contrarian thinking has driven Schaeffer’s trading philosophy for nearly 40 years. But that doesn't mean other performance factors are blatantly disregarded. In fact, during times as volatile as these, there should be even more of an emphasis placed on leaving no stone unturned. As investor optimism reaches near-euphoric levels, is "high beta" perhaps the indicator to watch going forward?

The most powerful performance "factor" over the past month hasn't been the small cap Russell 2000 Index (RUT), but instead "high beta, " or stocks that exhibit greater volatility than a broad market index such as the S&P 500 Index (SPX). The Invesco S&P High Beta (SPHB) sits in the number one position by a large margin in a ranked performance of the more popularly traded broad market index exchange traded funds (ETF). The fund also seems quite welcoming to names in a wide array of sectors, including energy, financial services, and cruise lines, with respective stocks Devon Energy (DVN), Discover Financial (DFS), and Carnival (CCL), in particular focus.

A look at daily year-to-date (YTD) fund flows shows their entire YTD inflow of $400 million plus just occurred over the October - November period. For context, SPHB's assets under management comes in at $712 million. This flourish leaves open the possibility of a massive amount of additional inflows, which in turn creates a "halo effect" of sorts for the top holdings. It sets up the already-successful fund for a flourishing finish to 2020.

There's a lot more to unpack here, especially when factoring in high beta’s counterpart low beta. On Friday, the high-beta/low-beta ratio chart broke out from the past decade-long resistance level. In the ensuing days, the question then became; will the ratio breach the prior resistance levels once more, or will that area now serve as possible support going forward? We now know that, thanks to Schaeffer's Senior Market Strategist Matthew Timpane, high-beta/low-beta ratio "successfully backtested the breakout on the daily chart at the beginning of the week. Giving high-beta plays the potential to recommence higher into the holiday season."

Compare such a signal to two others that popped up this week. According to the American Association of Individual Investors (AAII), for the first time since late March, the 10-week average of bullish sentiment is now higher than the ten-week of bearish sentiment. Meanwhile, the S&P 500 closed 16.26% above its 200-day moving average on Wednesday, its most elevated since December 2009.

With all of this feel-good optimism bubbling over, it's astute to take a step back and remember that risks are always imminent. The vaccine optimism that drove recent sentiment higher could run into logistical issues. Political gridlock in Washington D.C. is always a threat. In December of 2019, did anyone think that we'd be in the midst of a global pandemic? So, while market sentiment continues to show signs of euphoria as referenced above and below, a pullback could always be waiting around the corner. Thus, in lieu of tying up cash with share purchases (or accepting the steep risk profile and margin requirements of selling shares short), one can reduce cash outlay and overall market exposure through the purchase of options, while still participating in a stock's directional movement.

Subscribers to Bernie Schaeffer's Chart of the Week received this commentary on Sunday, December 6.

Nokia Corporation (NYSE:NOK) is a global technology company headquartered in Espoo, Finland. The tech company offers a portfolio of network equipment, software, services and licensing opportunities. Just about a decade ago, NOK was one of the world’s top cell phone manufacturers but has since been overtaken by Apple (AAPL) and Samsung.

Today, Nokia is working to revamp its entire business approach with a three-prong plan. On Oct. 29, Nokia announced the first phase of its plan by sharing a new operating model designed to better position Nokia for ever-changing market and align itself better with customer needs. The second phase of Nokia’s plan is scheduled to be released to investors next week, on December 16.

So far in 2020, Nokia stock has increased 6%. Back in March of this year, Nokia stock reached a 52-week low of $2.34, but has since recovered by nearly 80%. Nokia stock price is currently down 22% from its 52-week high of $5.14.

Nokia stock has been 50/50 compared to Wall Street's earnings expectations over the past 12 months. In the final quarter of 2019, Nokia stock beat expectations by $0.03, reporting an earnings per share (EPS) of $0.17. In first quarter of 2020, Nokia stock matched estimates with its EPS of $0.01. Nokia stock increased its EPS in the second quarter, reporting an EPS of $0.07 and beating expectations by a margin of $0.04. In the third quarter, Nokia stock failed to meet expectations, reporting an EPS of $0.06 and missing expectation by $0.01, 14%. Wall Street expects Nokia’s EPS to jump up to $0.13 for the final quarter of 2020.

Meanwhile, in the options pits, calls have been popular over the last two weeks. This is per NOK's 10-day call/put volume ratio of 41.64 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 81% of readings in its annual range. This indicates a much healthier-than-usual appetite for long calls of late. Echoing this, short-term players have rarely been more call-heavy. The stock's Schaeffer's open interest ratio (SOIR) of 0.17 sits in the 15th percentile of its annual range.

From a fundamental perspective, Nokia stock is showing promising signs to potential investors. The company’s income statement has shown a positive change in net income over the last three years. Investors should keep a close eye on the company as details Nokia’s future commitments continue to be released.

Zynga Inc. (NASDAQ:ZNGA) is an American game developer responsible for releasing the incredibly popular Facebook (FB) game “FarmVille.” Zynga’s games are available in more than 150 countries and can be played across multiple social platforms and mobile devices all over the world.

On October 2, ZNGA announced its acquisition of Rollic. The acquisition was for 80% of the Rollic business, but Zynga clarified its plans to acquire the remainder of the company over the next three years. Then, yesterday, ZNGA announced that its brand new subsidiary, Rollic, had completed the acquisition of Onnect for $6 million.  Onnect is a connection-based pair-matching puzzle game.  

Suffice it to say that it has been a busy fourth quarter so far for Zynga. The stock is up almost 42% in 2020. However, the shares remain off their Aug. 6 annual high of $10.69, with shorter-term resistance coming from ZNGA's 50-day moving average.

That being said, now looks like an opportune time to get in on ZNGA's next move with options. The equity’s Schaeffer’s Volatility Index (SVI) of 41% stands in the low 13th percentile of its annual range. This means options players are pricing in relatively low volatility expectations at the moment.

One word of caution for prospective options traders though. Zynga stock currently ranks an incredibly low on the Schaeffer's Volatility Scorecard (SVS), with a score of just seven out of 100. This scorecard is used to identify which underlying stock options have historically had underpriced or overpriced options. Low SVS readings indicate consistently realized lower volatility than its options have priced in -- pointing to ZNGA being a potential premium-selling candidate, rather than a premium-buying candidate.

Insurance giant Progressive Corporation (NYSE:PGR) has a lot on the horizon that investors can get excited about. On Dec. 4, Progressive declared a quarterly dividend of $0.10 per share and an annual dividend in the amount of $4.50 per share. In total, the company will be paying $4.60 per share on January 15, 2021. This payment will be made to all shareholders of record as of January 8, 2021. But before that, Progressive will step into the earnings confessional a week from today on Dec. 18.

So far this year, Progressive stock has tacked on an impressive 30%. And while the shares have pulled back from their Oct. 13 record high, their 160-day moving average has stepped up as support. And despite PGR's outperformance in 2020, 10 of 14 analysts in coverage rate it a "hold" or "strong sell," indicating a round of upgrades and/or price-target hikes could keep the wind at the stock's back.

PGR has a muted history of post-earnings reactions, averaging a historical move of 3.3% in the last eight quarters, regardless of direction. Overall though, Progressive has beat expectations on its  four most recent earnings reports. In the fourth quarter of 2019 the company topped its expectations by two cents. In the first quarter of 2020, Progressive exceeded expectations by a relatively larger margin of $0.39. An 11 cent beat the second quarter of 2020 is nothing to shake your fist at, and neither is the 17 cent, or 10% beat it scored in its most recent quarter.

The company has a forward dividend of $4.90 and a forward dividend yield of 5.28%. Progressive stock paid a total of $2.81 per share to investors in 2019. PGR has paid dividends since 1989.

From a fundamental point of view, Progressive is performing phenomenally. Its price-earnings ratio is currently at a very low 10.84. The company also has had incredible revenue and net income growth over the past few years. Progressive has added more than $15 billion in revenue since 2016 and has nearly quadrupled its net profits in just four years. In addition, the company just raised its dividend to a yield currently over 5%. Progressive does carry a substantial amount of debt at $5.58 billion, but also has a hefty $4.76 billion in cash. Overall, Progressive stock presents a great opportunity for high yielding dividend returns and decent future stock growth.

Stocks finished the day on Thursday mostly lower, after jobless claims came in higher than Wall Street's estimates. Congress continues to debate the specifics of a COVID-19 relief package. Investors were still waiting for the outcome of the Food and Drug Administration (FDA) meeting regarding Pfizer's (PFE) coronavirus vaccine, which ended up being approved after-hours. The Dow Jones Industrial Average (DJI - 29,999.26) fell 69.6 points on Thursday. The S&P 500 Index (SPX - 3,668.10) dropped 4.7 points and the Nasdaq Composite (IXIC - 12,405.81) was up 66.9 points on Thursday. The Cboe Volatility Index (VIX - 22.48) added 0.2 point yesterday.

The earnings reports today will be almost non-existent, but investors will have producer price index (PPI) and consumer sentiment data to unpack to close out this trading week.

For your convenience, we have rounded up the only company slated to release earnings today, December 11:

Construction Partners, Inc. (NASDAQ:ROAD -- $483.7429.11) provides construction products and services to public and private infrastructure projects. Construction Partners will report its fourth-quarter earnings before the bell today.

Here is a quick recap of how Thursday's earning calls played out:

Adobe, Inc. (NASDAQ:ADBE -- $483.74) operates as a diversified software company worldwide. Earnings per share were up 22.71% over the past year to $2.81, which beat the estimate of $2.66. Revenue of $3,424,000,000 up by 14.44% from the same period last year, which beat the estimate of $3,360,000,000.

Ciena Corporation (NYSE:CIEN -- $47.18) provides network hardware, software, and services that support the transport, switching, aggregation, service delivery, and management of video, data, and voice traffic on communications networks. Earnings per share increased 3.45% year over year to $0.60, which missed the estimate of $0.63. Revenue of $828,480,000 declined by 14.41% from the same period last year, which beat the estimate of $825,360,000.

Broadcom, Inc. (NASDAQ:AVGO -- $416.22) designs, develops, and supplies a range of semiconductor devices. Earnings per share rose 17.81% year over year to $6.35, which beat the estimate of $6.25. Revenue of $6,467,000,000 higher by 12.16% year over year, which beat the estimate of $6,430,000,000.

Dave & Buster's Entertainment, Inc. (NASDAQ:PLAY -- $25.63) owns and operates entertainment and dinng venues for adults and families. Earnings per share were down 5050.00% year over year to ($0.99), which beat the estimate of ($1.11). Revenue of $109,052,000 declined by 63.57% year over year, which missed the estimate of $109,360,000.

Oracle Corporation (NYSE:ORCL -- $59.73) provides products and services that address enterprise information technology environments. Earnings per share increased 17.78% over the past year to $1.06, which beat the estimate of $1.00. Revenue of $9,800,000,000 up by 1.92% year over year, which beat the estimate of $9,790,000,000.

Looking ahead to next week, market activity is slated to ramp up ahead of the end of the year, with a number of economic indicators for investors to analyze as they hit December's halfway point. A two-day Federal Reserve meeting is scheduled for Wednesday and Tuesday. Investors can also expect production and capacity utilization data, as well as import price and manufacturing indexes to be released. Retail sales, housing starts and inventories data, are also on the schedule, as well as the weekly jobless claims update. 

As for earnings, a bunch of major companies will step up to the earnings plate on Thursday, such as Lennar (LEN), Carnival (CCL), Navistar (NAV) and General Mills (GIS). FedEx (FDX) and Nike (NKE) will also report earnings. All economic dates listed here are tentative and subject to change.