Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Sep 19, 2023 at 10:51 AM
  • Intraday Option Activity
  • Buzz Stocks

Stitch Fix Inc (NASDAQ:SFIX) stock has reversed its premarket losses, up 5.9% at $3.23 at last glance. The styling platform announced wider-than-expected fiscal fourth-quarter losses of 24 cents per share, though revenue beat estimates, after which no fewer than six analysts lowered their price targets. 

On the charts, SFIX has closed 11 of the last 12 days lower, and finished six out of the last seven weeks in the red. Familiar support at the $2.80 level seems to have captured today's earlier pullback, however. Today's bounce could have already been in the cards, per the security's 14-day relative strength index (RSI) of 27.8, which sits in "oversold" territory.

So far today, 5,839 calls and 3,777 puts have been exchanged, which is six times the amount typically seen at this point. The weekly 9/22 3.50-strike call is the most active, with new positions being opened at the 3-strike call in the same weekly series. 

Call traders have been targeting SFIX at a much faster-than-usual rate lately. The security's 50-day call/put volume ratio of 2.35 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits higher than 99% of readings from the past year. 

Conversely, analysts are overwhelmingly bearish on Stitch Fix stock, with all 14 in coverage carrying a "hold" or worse rating. It's also worth noting that short interest represents 11.7% of the stock's available float. 

Published on Sep 19, 2023 at 10:30 AM
  • Analyst Update
  • Buzz Stocks
TD Cowen downgraded Starbucks Corp (NASDAQ:SBUX) to "market perform" from "outperform," and slashed its price target to $107 from $117. The brokerage firm noted macro challenges for same-store sales in China, as well as low-priced competition that could persist for the next couple of years. At last check, SBUX is down 2% at $94.84.
 

Overhead pressure from its 50-day moving average has kept the equity in check since mid-August, while the $100 region rejected a rally later that month. SBUX currently sports a 4.1% year-to-date deficit, and could soon retest support at the $94 level.

Short-term options traders are extremely bearish, per the security's Schaeffer's put/call open interest ratio (SOIR) of 1.11 that sits in the top percentile of annual readings. Echoing this, Starbucks stock's 10-day put/call volume ratio of 1.90 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits in the 97th percentile of its annual range.

The equity boasts affordably priced premiums, too, per its Schaeffer's Volatility Index (SVI) of 18% that ranks higher than only 6% of annual readings. In other words, the options pits are pricing in low volatility expectations right now.

Published on Sep 19, 2023 at 9:09 AM
  • Analyst Update
 
Published on Sep 19, 2023 at 9:04 AM
  • Opening View

Yesterday's muted price action is extending into today, with stock futures barely moving before the bell. The U.S. Federal Reserve’s two-day policy meeting kicks off today, taking much of Wall Street's focus. CME Group's FedWatch tool is pricing in a 99% chance the central bank skips a hike tomorrow, although investors remain on edge. Elsewhere, U.S. housing starts fell 11.3% in August from a revised 2% rise the previous month. 

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

  • Watch these century marks and millennium levels on the SPX, per Schaeffer's Senior V.P. of Research Todd Salamone. 
  • How this pharma stock doubled options traders' money. 
  • Plus, RKLB plummets on launch failure; SBUX downgraded; and outperforming SMCI hit with bull note. 

Futures Sep19

5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw over 1.3 million call and more than 802,601 put contracts exchanged on Monday. The single-session equity put/call ratio fell to 0.61 and the 21-day moving average stayed at 0.66.
  2. Rocket Lab USA Inc (NASDAQ:RKLB) stock is down 23% premarket, after the company suffered its first launch failure in over two years. The next mission has been postponed. Heading into today, the stock is up 33.7% since the start of the year, though if these losses hold, the stock will drop back into penny stock territory. 
  3. Starbucks Corp (NYSE:SBUX) is down 1.2% in electronic trading, after Cowen downgraded the stock to "market perform" from "outperform," with a price-target cut to $107 from $117. The firm cited the "worrisome" macro backdrop in China, which could affect share growth. SBUX is down 2.5% in 2023. 
  4. Super Micro Computer Inc (NASDAQ:SMCI) stock is up 1.9% before the bell, after Barclays initiated coverage with an "overweight" rating and $327 price target -- a 34% premium to yesterday's close. On the charts, SMCI is outperforming with a 197.6% year-to-date lead. 
  5. See what economic data is scheduled this week. 

buzzsept19

Investors Eye Fed Minutes Overseas

Stocks in Asia mostly fell today, as traders digested the Reserve Bank of Australia’s meeting minutes from Sept. 5. Hong Kong’s Hang Seng bucked this sentiment, rising 0.4%, while China’s Shanghai Composite turned in a marginal loss. Rounding out the region, Japan’s Nikkei and South Korea’s Kospi fell 0.9% and 0.6%, respectively.

European markets are mixed, as investors in the region await the beginning of the U.S. Fed's two-day policy meeting. At last check, London’s FTSE 100 is fractionally higher, France’s CAC 40 sports a 0.2% lead, and Germany’s DAX is down 0.2%.

Published on Sep 18, 2023 at 4:26 PM
  • Market Recap

Wall Street failed to find its footing today, closing relatively muted as investors continued to bet on how the Federal Reserve will navigate its interest rate decision this week. The Dow, S&P 500, and Nasdaq all settled just above breakeven.

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

  • Don't sweat this energy stock pullback.
  • Analyst says "buy" this food delivery stock.
  • Plus, September's spectacles; PayPal's c-suite news; and Darden Restaurants' earnings.

closing summary sep18

nyse nasdaq sep18

5 Things to Know Today

  1. Officials in New York are cracking down on unlicensed smoke shops selling marijuana as the legal marketplace struggles. (CNBC)
  2. Ukraine said it will sue Poland, Hungary, and Slovakia amid bans on Ukrainian agricultural products. (Reuters)
  3. Multiple layers to watch this month.
  4. Behind PayPal stock's bear note.
  5. Olive Garden parent preps for earnings.

There were no earnings of note today.

UVOL Sep18

Crude Prices Extend Winning Streak

The price of oil jumped for the third-straight day Monday, settling at a new 2023 high. Investors seem to have placed wagers on tighter global crude supplies, as they await another interest rate decision from the Fed. Crude for October delivery added 71 cents, or 0.8%, to settle at $91.48 per barrel for the day.

Gold prices settled at their highest mark in more than two weeks thanks to a weakening greenback. December-dated gold gained $7.20, or less than 0.4%, to settle at $1,953.40 an ounce for the day.

Published on Sep 18, 2023 at 2:32 PM
  • Trade Postmortem

Subscribers to Schaeffer's Leverage Trader service more than doubled their investment with our Bristol-Myers Squibb Co (NYSE:BMY) September 63 put recommendation, all in in just two weeks. Below, we will unpack how this trade ultimately played out, and dig into the reasoning behind this bearish bet on the drugmaker.

At the time of our recommendation on Sept. 5, the declining 50-day moving average had just rejected the shares. The security was also underperforming compared to its pharmaceutical industry peers, down 14% for the year, while its 14-day relative strength index (RSI) turned over from a brief "overbought" condition.

BMY 50 Day

Meanwhile, short interest had more than tripled in the most recent two-week reporting period, with bears seemingly providing major headwinds. BMY also boasted affordable premiums, per its Schaeffer's Volatility Index (SVI) of 16% that sat higher than only 4% of annual readings. In other words, traders were pricing in low volatility expectations.

While Bristol-Myers Squibb stock attempted a small rally after our recommendation, the aforementioned 50-day trendline capped this upward movement. The security then hit a Sept. 15, one-year low of $58.86, which prompted us to exit the position, allowing subscribers to collect a 107% profit in just 10 days.

Published on Sep 18, 2023 at 12:05 PM
Updated on Sep 18, 2023 at 2:27 PM
  • Midday Market Check

 

 

Published on Sep 18, 2023 at 2:20 PM
  • Analyst Update
  • Quantitative Analysis

Walt Disney Co (NYSE:DIS) has attracted plenty of investor attention lately, amid the entertainment giant's potential sale of ABC. The company also recently settled its cable dispute, returning ESPN and other channels to Spectrum. Television streaming -- and the future of it -- is a hot topic amongst analysts right now, and Raymond James joined the discourse today. The firm initiated coverage on DIS with an "outperform" rating, saying the company's "strong asset portfolio will help support a steady push toward streaming." 

On the charts, DIS has been underperforming with a 21% year-over-year deficit, and just hit a Sept. 7 three-year low of $79.75. Though the Dow member has been rising from those lows, the bounce may be short-lived, as it's just come into contact with its 50- and 60-day moving averages, two historically bearish trendlines.

According to Schaeffer's Senior Quantitative Analyst Rocky White, DIS come within one standard deviation of its 60-day moving average seven times in the past three years, after which the stock was lower one month later 86% of time, averaging a 7% loss. Walt Disney stock's 50-day trendline has seen eight similar signals, and was lower after the ensuing month 75% of the time to average a 3.9% drop.  

When speculating on DIS, now looks like a good time to weigh in with puts. The security's Schaeffer's Volatility Index (SVI) of 23% ranks in the low 7th percentile of its annual range, meaning options traders are pricing in low volatility expectations at the moment. 

DIS Sep18

Published on Sep 18, 2023 at 11:41 AM
  • Quantitative Analysis

Northern Oil & Gas Inc (NYSE:NOG) stock survived the broader market's August pullback, hitting a roughly five-year high of $43.64 on Sept. 5. The shares have pulled back since then. However, there is reason to believe the stock could soon stage another bounce higher, as it has just run into a trendline with historically bullish implications. 

NOG is trading within one standard deviation of its 50-day moving average for the fifth time in the past three years. According to Schaeffer's Senior Quantitative Analyst Rocky White, the equity was positive one month later after half of these signals, averaging a 5.2% return. A similar move from the stock's current perch at $40.71 would push the shares near the $43 level -- home to its 2023 highs. 

NOG Chart September 182023

Northern Oil & Gas stock could also benefit from an unwinding of options traders' pessimism. In fact, the security's 50-day put/call volume ratio of 2.88 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 94th percentile of its annual range.

Now looks like a good time to weigh in on NOG with options, too, per its Schaeffer's Volatility Index (SVI) of 29%, which ranks in the low 8th percentile of its annual range. This means options traders are pricing in low volatility expectations at the moment. 

It's also worth noting that short interest represents 9.8% of the stock's available float. It would take shorts over six days to cover their bets, leaving plenty of pent-up buying power. 

Published on Sep 18, 2023 at 11:17 AM
  • Earnings Preview
  • Buzz Stocks

Olive Garden parent Darden Restaurants Inc (NYSE:DRI) is gearing up for this week's earnings report, scheduled before the open on Thursday, Sept. 21. The stock has closed lower following its last four reports, including a 4.4% drop in September 2022. In the past two years, DRI has averaged a next-day swing of 2.8%, regardless of direction. This time around the options pits are pricing in a post-earnings move of 4.7%. 

On the charts, DRI has been on a decline since its July 21, record high of $173.06, with pressure at its descending 20-day moving average. The security down 0.7% at $149.08 today, and up 7.9% since the start of the year. 

The brokerage bunch leans bullish on DRI. Of the 22 analysts in coverage, 16 carry a "buy" or better rating on Darden Restaurants stock, with six a tepid "hold," and no "sell" ratings in sight. The 12-month consensus price target of $172.92 is a 15.7% premium to current levels. 

The security is seeing well-priced premiums at the moment, too, per its Schaeffer's Volatility Index (SVI) of 24%, which ranks in the 25th percentile of its annual range. This means options traders are pricing in relatively low volatility expectations at the moment. 

Published on Sep 18, 2023 at 10:03 AM
  • Buzz Stocks

DoorDash Inc (NYSE:DASH) is up 2.6% to $83.09 at last check, after the food delivery name attracted an upgrade from Mizuho. The analyst upgraded DASH to "buy" from "neutral" and hiked its price target to to $105 from $90, while D.A. Davidson also lifted its price objective to $85 from $72. This attention comes after the company expanded its partnership with Aldi to offer alcohol, and broadened its grocery selection with other partners.

The security has struggled with a ceiling at the $87 level since cooling down from its July 31, one-year high of $92.52. Its 80-day moving average remains as a reliable source of support, however. So far this year, DoorDash stock is up more than 67%.

Short-term options traders lean bullish. The equity's Schaeffer's put/call open interest ratio (SOIR) of 0.52 stands in the low 7th percentile annual readings. This means traders have been more optimistic than usual. 

Call volume is running at triple the intraday average volume today, with 1,770 bullish bets exchanged so far. Most popular is the weekly 9/22 85-strike call, where new positions are being opened.

The equity boasts affordably priced premiums, too, per its Schaeffer's Volatility Index (SVI) of 34% that ranks higher than only 6% of annual readings. In other words, the options pits are pricing in low volatility expectations right now.

Published on Sep 18, 2023 at 9:27 AM
  • Analyst Update
 

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