While things got off to a good start on Monday, with the major indexes building on Friday's rally, the Dow Jones Industrial Average (DJI) and S&P 500 Index (SPX) pivoted lower at the tail end of the session. By the next day, Wall Street managed a win, even after Federal Reserve Chairman Jerome Powell dodged the topic of economic policy in his latest address. Things really picked up for the Nasdaq Composite (IXIC), which logged its first four-day win streak since September, as bond yields cooled.

An encouraging consumer price index (CPI) reading rolled in on Thursday, and the Nasdaq went on to score its fifth-straight win for the first time since July. Against the improving backdrop, Wall Street's "fear gauge," the Cboe Volatility Index (VIX), was all over the place. Today, the VIX is heading for its worst week since October, while the major benchmarks pace for solid weekly wins despite a dire warning from JPMorgan Chase (JPM). 

Schaeffer's Top Picks for 2023

Last week, we mentioned that our top picks for the year are rolling out, and we kicked things off by highlighting drugmaker AbbVie (ABBV). Well, we've got even more stocks for you to watch.

Retail name Macy's (M) sports a low price/earnings ratio and attractive dividend yield, and has largely brushed off recession headwinds, making it a prospective buy-and-hold for 2023. Cloud stock MongoDB (MDB) has plenty of support in place, as it trades at more than six times its initial public offering (IPO) level. Elsewhere, it looks like semiconductor company ASML Holding (ASML) might have a monopoly on EUV lithography, while Aehr Test Systems' (AEHR) 2023 rally is showing no signs of slowing down.

Biggest Analyst Calls of the Week

Logitech (LOGI) shared its preliminary third-quarter results, and J.P. Morgan Securities downgraded the stock after the numbers missed expectations. Meanwhile, Jefferies downgraded these two streaming stocks, while KeyBanc Capital Markets upgraded Bumble (BMBL) on a host of resilient data. Elsewhere, Piper Sandler issued a bull note for Uber Technologies (UBER), after noting the positive impact higher car prices could have on the rideshare stock.

Holiday-Shortened Week Features Fed Updates, Earnings

Next week will be short, as markets are closed on Monday in observance of Martin Luther King Jr. Day, but there's no shortage of Fed updates and earnings reports on the docket. Plus, here's a look at how the third year of a Presidential cycle typically plays out for the stock market.

Subscribers to Chart of the Week received this commentary on Sunday, January 8.

In the last quarter of 2022, Waste Management Inc (NYSE:WM) stock broke a technical downtrend and retested that level before advancing. WM is now back above its 100-day moving average, just off all-time levels, and has been a steady uptrend over essentially any timeframe you select. For example, the shares are above their year-to-date breakeven while the SPDR S&P 500 ETF Trust (SPY) is off 16% in 2022, while their year-over-year breakeven remains positive compared to the SPY’s 13% 12-month haircut. Going back even further, WM’s three-year tally checks in at 54%, compared to the SPY’s 32% gain. 

Despite this outperformance, put traders won’t give up. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 1.50 sits higher than 71% of readings from the past year. Echoing this, WM’s Schaeffer's put/call open interest ratio (SOIR) of 1.09 ranks higher than 67% of annual readings, meaning short-term traders remain quite put-biased. Digging deeper, five of the top open interest positions are puts.

WM is approaching its 12-month consensus price target of $174, and could see revisions or upgrades higher, especially considering seven of the 11 brokerages maintain tepid “hold” stances. And among short sellers, bearish bets have increased by 32% in the last four months, all while WM has rallied, hinting at the technical strength of the stock.

Even further supporting our case, Friday afternoon WM was seen trading up 2.9% at $158.24, after several brokerages moved in with fresh bull notes. Raymond James approached with an “outperform” rating, Jefferies upgraded to a “buy” from “hold,” and both Citigroup and Citibank set “buy” recommendations, with the latter citing WM as an underappreciated natural gas opportunity. In other words: jump on board the Waste Management train, as there remains ample buying opportunity for bulls in the weeks ahead!

Earnings season is officially underway, with several big bank names stepping into the confessional this morning. How did JPMorgan Chase & Co. (NYSE:JPM), Wells Fargo & Co (NYSE:WFC), and Bank of America Corp (NYSE:BAC) fare? While the results look good on paper, the stocks' subsequent performance has left a lot to be desired. 

Blue-Chip Banker Slowed by Recession Fears

Heavy hitter JPMorgan Chase's adjusted fourth-quarter earnings of $3.56 topped analyst estimates of $3.07, while revenue of $35.57 billion was higher than the estimated $34.34 billion. JPMorgan Chase stock was last seen 0.4% lower to trade at $139.04 though, after the company disclosed it had set aside $1.4 billion to prepare for a mild recession. The shares have taken a 18% haircut year-over-year, but have added 37% off their Oct. 12 bottom of $101.28.

At last check, over 48,000 options have changed hands, volume that's triple the average intraday amount. The January 140 call that expires next Friday is seeing notable buy-to-open activity today.

Options Bulls Unfazed by Wells Fargo Whiff

Wells Fargo's adjusted fourth-quarter earnings came in at 61 cents, lower than the 66 cent estimate from analysts. Revenue also fell short of expectations, sending WFC lower by 2.2% to trade at $41.88. The shares are off by 25% in the last 12 months, but a short-term floor is forming at $40.

Wells Fargo options are flying off the shelves. Over 100,000 contracts have changed hands in the first hour of trading, volume that's quadruple the average intraday amount. The January 40 put is getting a lot of attention, which will be interesting to watch in the next week.

Net Interest Income Bites Bank of America

Bank of America's adjusted fourth-quarter earnings and revenue both topped Wall Street's forecasts. However, the stock was last seen off by 1.5% to trade at $33.92, weighed down by net interest income that fell below expectations. Sticking with the theme--BAC is down 30% year-over-year, with several short-term trendlines keeping a lid on recent gains. Also of note: Bank of America stock is trading right at its post-earnings bull gap levels from October

Over 230,000 BAC contracts have been traded this morning, volume that's also four times the average intraday amount. The January 35 call is one to watch, given the stock's current perch.

Energy stocks Chesapeake Energy Corporation (NASDAQ:CHK) and Diamondback Energy Inc (NASDAQ:FANG) are in the spotlight today, after Gerdes Energy Research initiated coverage on both with a "buy" rating. This is the second bull note for the pair this week, as Mizuho assumed coverage on both with a "buy" on Monday as well. Both stocks are inching lower despite the praise, with CHK down 0.8% at last check, while FANG is 0.2% lower. 

The shares of Chesapeake Energy are outperforming with a 28.6% year-over-year gain, and bounced off the $84 level and 320-day moving average earlier this month. There is plenty of short-covering potential, too, as short interest makes up 7.8% of the stock's available float, or over five days' worth of pent-up buying power. 

Diamondback Energy stock is sporting a 21.1% year-over-year gain -- up 6% since the start of 2023. The stock is looking to snap a six-day win streak, should today's minor losses hold, though a slew of moving averages linger below as potential support.

It's also worth noting that options bears have been targeting FANG despite its relative strength on the charts, per the security's 10-day put/call volume ratio of 10.90 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks higher than all other readings from the past year. 

Dow Jones Industrial Average (DJIA) futures are down more than 281 points, while futures on the Nasdaq-100 Index (NDX) and S&P 500 Index (SPX) are firmly in the red as well. Should these losses hold, the Nasdaq would snap its best win streak since July. Bank stocks are weighing on the market this morning, with J.P. Morgan Chase (JPM) announcing that a "mild recession" is now a "central case." Meanwhile, December's import price index rose 0.4%, compared to analysts' anticipated 0.8% drop, marking its first increase in six months. Despite today's negative start, all three indexes are eyeing notable weekly wins.

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

• Layers of technical support in place for Dollar General stock. 
• Crypto stocks boosted after Bitcoin reclaimed key level. 
• Plus, CRM downgraded; LOGI extends slide; and WFC falls on costs. 

5 Things You Need to Know Today

1. The Cboe Options Exchange (CBOE) saw more than 1.4 million call contracts and 943,177 put contracts traded on Thursday. The single-session equity put/call ratio fell to 0.65 and the 21-day moving average stayed at 0.80.
2. Salesforce Inc (NYSE:CRM) is down 2.1% premarket, after Atlantic Equities downgraded the shares to "neutral" from "overweight." The stock's 100-day moving average has put pressure on the shares since August, and more recently, the $150 level has moved in as a ceiling. Year-over-year, the equity is down 37.1%. 
3. Logitech International SA (NASDAQ:LOGI) is extending yesterday's plummet, down 4.9% in electronic trading, after Deutsche Bank downgraded the stock to "hold" from buy." Both UBS and BofA Global Research chimed in with price-target cuts as well. Year-to-date, LOGI is already down 12.2% heading into today. 
4. The shares of Wells Fargo & Co (NYSE:WFC) are down 3.9% before the bell as investors retreat, following the release of shrinking profits. Year-over-year, WFC is down 24.1%. 
5. Today will bring the University of Michigan consumer sentiment index, and the UMich one- and five-year consumer inflation expectations.

European Markets Eye GDP Data

Stocks in Asia were mostly higher to close out the week, after the stateside CPI encouraged overseas investors. China’s Shanghai Composite and Hong Kong’s Hang Seng both added 1%, after China’s exports and imports fell less than expected last month. South Korea’s Kospi tacked on 0.9%, after the Bank of Korea raised interest rates by 25 basis points. Japan’s Nikkei bucked the broader market, falling 1.3% after index heavy hitter Fast Retailing plunged, in the wake of a 40% wage hike for its workers.

European markets are mostly higher this afternoon following the release regional economic data. Germany’s gross domestic product (GDP) rose 1.9% for the full year 2022, and settled higher than in 2019 ; however, the DAX was last seen trading fractionally lower. London’s FTSE 100, meanwhile, is 0.2% higher at last glance, after U.K. GDP grew 0.1% in November, beating out economists’ estimates of a 0.2% contraction. Rounding out the region, France’s CAC 40 sports a marginal lead.

Stocks regained their footing this afternoon, after consumer price index (CPI) data for December showed inflation is easing as economists expected. Traders are now turning to the Federal Reserve, which tied its hawkish policy to controlling red-hot inflation, for direction.

In response to the strong economic data, the Dow rose 216 points for its third-straight triple-digit gain. While the S&P 500 and Nasdaq saw more modest wins, the latter is on its longest win streak since July after a fifth consecutive pop. Conversely, the Cboe Volatility Index (VIX) settled below 20 for the first time since Dec. 2.

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

• Unpacking Logitech stock's massive tumble. 
• Why options bulls blasted these 3 stocks.
• Plus airline giant raises forecast; 2 crypto stocks popping; and Dollar General stock could soon surge.

5 Things to Know Today 

1. Delta Air Lines (DAL) revealed plans to curb employee access to its lounges when they are flying standby starting next month as it looks to avoid crowding. (CNBC)
2. Swedish iron-ore miner LKAB identified “significant deposits” of rare earth elements that may reduce Europe’s dependency on China. (MarketWatch) 
3. American Airlines stock extended its rally on a forecast hike.
4. Bitcoin's surge boosted these 2 crypto-adjacent stocks.
5. Dollar General stock nears 2 historically bullish trendlines.

Gold Prices Surge to Highest Level Since April

Oil prices saw even more gains on Thursday, nabbing a sixth-straight gain to mark their longest win streak since February. Cooling inflation and a weaker U.S. dollar helped the commodity. February-dated crude rose 98 cents, or 1.3%, to settle at $78.39 per barrel.

Gold prices also had a big day, settling at their highest level since April. Hopes that the Fed will slow down the pace of interest rate hikes contributed to the yellow metal's rise. In turn, February-dated gold added $19.90, or 1.1%, to settle at $1,898.80 per ounce.

The shares of Dollar General Corp (NYSE:DG) have been sliding on the charts since the start of the year, though they're still holding onto a 1.9% year-over-year gain at last glance. There is reason to believe DG could soon stage a bounce, however, as the stock has pulled back to two trendlines with historically bullish implications, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. 

Dollar General stock is within one standard deviation of its 320-day moving average for the seventh time in the past three years, after which the stock has been positive one month later 100% of the time, averaging a 9.2% gain. Furthermore, the stock's 260-day average has seen eight similar signals, with DG higher one month later six of those times in the past three years, averaging a 4.3% gain. 

Now could be a good time to weigh in on the security's next move with options. The stock is seeing attractively priced premiums at the moment, per DG's Schaeffer's Volatility Index (SVI) of 26%, which sits in the 19th percentile of its annual range.