Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Jan 24, 2023 at 1:12 PM
  • Quantitative Analysis

Software stock Zscaler Inc (NASDAQ:ZS) has recovered nicely from its early January rut near the $105 level -- a more than two-year low. The shares have added 10.5% already this year, with the bulk of this price action occurring over the last two sessions. However, this recent pop has Zscaler stock trading near a historically bearish trendline.

More specifically, ZS just came within one standard deviation of its 60-day moving average after a lengthy stretch below the trendline. For the purpose of this study, Schaeffer's Senior Quantitative Analyst Rocky White defines that as the equity trading below the moving average for 80% of the time over the past two months, and closing south of the trendline in eight of the last 10 sessions.

According to White's data, five similar signals have occurred during the past three years. Zscaler stock was lower one month later after 80% of these signals, averaging a one-month loss of 5.9%. A similar move from the security's current perch would put ZS just above $116. 

ZS Chart January 242023

The security recently notched a bear note, with Deutsche Bank cutting its target price to $140 from $190. What's more, JPMorgan Securities initiated coverage with a "neutral" rating and a $124 target price. Of the 32 in coverage, 22 still say “buy” or better, and the equity’s 12-month consensus price target of $170.29 is a 37.7% premium to current levels, both of which indicate more bear notes could soon roll in.

ZS’ Schaeffer's Volatility Scorecard (SVS) is incredibly low right now, sitting at 24 out of 100. In simpler terms, Zscaler stock is a prime selling candidate. 

Published on Jan 24, 2023 at 11:57 AM
  • Midday Market Check
 
Published on Jan 24, 2023 at 11:08 AM
  • Options Recommendations
 
Published on Jan 24, 2023 at 10:14 AM
  • Intraday Option Activity
  • Analyst Update
Drilling down to today's options activity, 7,012 puts have crossed the tape so far, which is double what's typically seen at this point. Most popular is the weekly 1/27 15-strike put, where new positions are being opened.
Published on Jan 24, 2023 at 10:11 AM
  • Analyst Update
 
Published on Jan 24, 2023 at 10:03 AM
  • Intraday Option Activity
  • Buzz Stocks
 Overall options volume is today running at six times the intraday average, with 4,056 calls and 1,365 puts across the tape so far. Most popular is the weekly 1/27 460-strike call, followed by the 450-strike call in the same weekly series, with new positions being opened at both.
Published on Jan 24, 2023 at 9:11 AM
Updated on Jan 24, 2023 at 9:13 AM
  • Opening View

Following two straight days of gains on Wall Street, futures on the Dow Jones Industrial Average (DJIA) are down triple digits ahead of the open, while Nasdaq-100 Index (NDX) and S&P 500 Index (SPX) futures swim in red ink as well. Investors are eyeing this week's busy earnings docket, with a host of economic data due at the end of the week. 

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

  • Schaeffer's Senior V.P. of Research Todd Salamone shares the good and bad news encompassing the S&P 500 right now. 
  • Chevron stock has room to run. 
  • Plus, LULU drops on downgrade; LMT reports earnings; and analyst praises LYFT. 

Futures Jan24

5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw more than 1.8 million call contracts and over 1 million put contracts traded on Monday. The single-session equity put/call ratio fell to 0.53 and the 21-day moving average stayed at 0.81.
  2. Lululemon Athletica Inc (NASDAQ:LULU) is down 2.4% premarket, after Bernstein downgraded the stock to "underperform" from "market perform," with a price-target cut to $290 from $340. The firm warned of a "reset" on the way for the retailer. Should these losses hold, LULU will dip back below its year-over-year breakeven level. 
  3. Lockheed Martin Corp (NYSE:LMT) is up 1.7% before the bell. The company's fourth-quarter results beat expectations, however, its profit forecast disappointed amid lingering supply issues and costs. Year-over-year, the equity is up 18.9%. 
  4. Lyft Inc (NASDAQ:LYFT) is up 4.5% in electronic trading, after Keybanc upgraded the shares to "overweight" from "sector weight." The analyst in coverage sees an over 50% potential upside for LYFT as demand stabilizes, citing company layoffs as well. The rideshare name is already up 39.8% since the start of 2023. 
  5. Today will bring the S&P U.S. manufacturing and services PMIs.

buzzjan24

Investors Unpack Inflation Data Overseas

While the majority of Asian bourses were closed to celebrate the Lunar New Year Holiday, Japan’s Nikkei added 1.5% on Tuesday. The au Jibun Bank Flash Japan manufacturing purchasing managers’ index (PMI) came in flat for the second-straight month, the yen strengthened against the greenback, and the 10-year Japanese Government Bond yield held the area just under the central bank’s upper rung of its tolerance range.

The euro zone’s s latest PMI data is weighing on the region today. While the S&P Global composite PMI checked in at 50.2 for January, legging out forecasts of 49.8, the U.K. flash PMI showed services and manufacturing fell to 47.8 this month – the sharpest contraction rate in two years. At last check, London’s FTSE 100 and Germany’s DAX are 0.3% lower, while France’s CAC 40 is fractionally higher.

Published on Jan 24, 2023 at 8:00 AM
  • Editor's Pick
  • Trader Content

Below is an excerpt from this yesterday's episode of Schaeffer's Playbook of the Week, featuring Schaeffer's Senior Market Strategist Matthew Timpane. Below, Matthew makes a bullish case for oil & gas stock Chevron Corporation (NYSE:CVX).

"As you can see below, Chevron just had a flag breakout and has gone through a consolidation phase that's now resetting up. If the shares can get above $181 level, it's at least off to the races back to the prior highs and maybe much more than that.

PLBK CVX

CVX is above the $180 pivot level when looking at open interest configuration. That’s a key gamma strike level, and peak call open interest is at the 200-strike that could act as a magnet. That’s through April expiration, too, so there's plenty of room and time up to that. 

Data at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows CVX with a 50-day put/call volume ratio that stands higher than 98% of annual readings. The 175-strike put wall is there for support too, right along the equity's 20-day moving average.

The stock's Schaeffer's Volatility Index (SVI) of 27% stands in the 12th percentile of readings from the past year, so options are pretty cheap right now. What's more, CVX's Schaeffer's Volatility Scorecard (SVS) tally sits at 88 out of 100, which points towards the tendency to outperform volatility expectations."

Join Schaeffer's Playbook of the Week now and tune in every Monday morning at 8:30 a.m. to get ready for the trading week with me. Click here for more information to get started.

Schaeffer's Playbook of the Week

Published on Jan 23, 2023 at 4:28 PM
  • Market Recap

The Dow and Nasdaq both added triple digits to start this week, as investors consider the possibility that the Federal Reserve will slow down interest rate hikes following months of monetary tightening. The S&P 500 managed to move back above the psychologically significant 4,000 level, ahead of a week jam-packed with major corporate earnings reports.

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

indexjan23

nysejan23

5 Things to Know Today 

  1. Spotify sent an internal memo to staff, announcing plans to layoff roughly 600 employees. (CNBC)
  2. China kicked off the Lunar New Year on Sunday with the biggest celebration since the start of the pandemic, and moved further away from this year's strict Covid-related restrictions. (MarketWatch
  3. Western Digital advances merger talks with Kioxia Holdings.
  4. Why the DOJ is keeping an eye on Abbot Laboratories.
  5. stocks making moves after upgrades.

Earnings January 232023

uvoljan232023

Gold Prices Hold Near April Highs

Oil prices were muted on Monday, with March-dated crude falling 2 cents, or 0.1%, to settle at $81.62 per barrel. This comes after black gold closed last week at its highest level since November, as markets continue to contend with the pending restrictions on Russian crude.

Gold futures closed today's session marginally higher, rising from earlier losses to hold near their April highs. February-dated gold added 40 cents, or 0.02%, to settle at $1,928.60 per ounce. 

Published on Jan 23, 2023 at 2:53 PM
  • Intraday Option Activity
  • Earnings Preview
Call traders are chiming in as well, with 28,000 calls exchanged so far, which is four times the intraday average, and double the amount of puts across the tape at this point. The March 190 call accounts for most of this volume, with new positions opening there. 
Published on Jan 23, 2023 at 2:41 PM
Updated on Jan 23, 2023 at 2:41 PM
  • Quantitative Analysis

 

 
Published on Jan 23, 2023 at 11:50 AM
  • Midday Market Check
 

Begin the New Year With Schaeffer's 7 FREE 2022 Stock Picks!

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