Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Jan 27, 2023 at 9:22 AM
  • Opening View

Stock futures are moderately lower as the last full week of January comes to an end. Investors are unpacking plenty of earnings reports, with blue-chip stock Intel (INTC) staging a steep slide after the company's disappointing results. U.S. consumer spending fell for the second-straight month, dropping 0.2% in December, while the personal consumption expenditures (PCE) index rose 4.4% year-over-year -- solidifying that a slowdown in red-hot pricing may be coming. Despite today's lagging performance, all three indexes are eyeing weekly wins.

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

  • Rallying energy stock has room to run. 
  • Plenty of economic data due out as February kicks off. 
  • Plus, RL downgraded; CVX slides after earnings; and SI continues path lower.

newfuturesjan27

5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw more than 1.3 million call contracts and 942,322 contracts traded on Thursday. The single-session equity put/call ratio fell to 0.68 and the 21-day moving average stayed at 0.81.
  2. BMO Capital Markets downgraded Ralph Lauren Corp (NYSE:RL) to "underperform" from "market perform," after the stock's recently rally on the charts. The shares are down 3.5% premarket. Year-to-date, RL is up 17.5%. 
  3. Chevron Corp (NYSE:CVX) is down 1.5% before the bell, after the oil name's mixed quarterly results. Asset writedowns and rising costs contributed to the company's lackluster report. Year-over-year, the equity is up 41.5%. 
  4. Crypto-adjacent stock Silvergate Capital Corp (NYSE:SI), which has been struggling alongside bankrupt FTX, since it held the crypto exchange's deposits, is down 9.3% in electronic trading. This negative price action comes after company suspended payments on its Series A preferred stock dividend. Year-over-year, SI is down 85.8%. 
  5. Today will bring pending home sales. Plus, the University of Michigan will release its consumer sentiment index, coupled with its one-year and five-year inflation expectations.

buzzjan27

Investors Eye Inflation Data out of Japan

Stocks in Asia closed the week higher, brushing off the latest inflation reading out of Japan. Tokyo’s core consumer price index (CPI) jumped 4.3% -- faster than expected and near its highest level since mid-1981. In South Korea, earnings are rolling in, helping the Kospi add 0.6% today. Rounding out the region, Hong Kong’s Hang Seng added 0.5% while markets in China were closed for a holiday.

European bourses are lower this afternoon. France’s CAC 40 was last seen down 0.3%, after consumer data for January showed living stands and future expectations declined. London’s FTSE 100 is marginally lower, after British Finance Minister Jeremy Hunt reiterated plans to hike taxes and stressed the need to proceed with post-Brexit reforms. Germany’s DAX is 0.2% lower at last glance.

Published on Jan 26, 2023 at 4:30 PM
Updated on Jan 26, 2023 at 4:37 PM
  • Market Recap

Strong gross domestic product (GDP) data eventually brought tailwinds to Wall Street, with the economy expanding a better-than-expected 2.9% in the fourth quarter. The Dow added 205 points, while the tech-heavy Nasdaq scored a triple-digit gain, thanks partially to upbeat earnings results from Tesla (TSLA). The S&P 500 settled firmly higher as well, with investors now eyeing next week’s Federal Reserve policy meeting, which could bring a 25 basis point rate hike.

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

  • Casino stock upgraded after earnings.
  • Setting up investing resolutions for 2023.
  • Plus, unpacking Tesla's quarterly win; keep tabs on this energy stock; and analyst turns bearish on PFE.

Closing Index Summary January 262023

 NYSE and Nasdaq Stats January 262023

5 Things to Know Today 

  1. Sam’s Club, which is owned by Walmart (WMT), plans to open more than 30 new U.S. clubs after seeing sales and memberships rise during the pandemic. (CNBC)
  2. The U.S. Food & Drug Administration (FDA) asked Congress to create a regulatory pathway for CBD, after noting it will not regulate it. (MarketWatch
  3. Tesla stock lured in options bulls with record revenue.
  4. This red-hot energy stock looks poised for more highs.
  5. Pfizer stock downgraded on lower Covid-19 expectations.

Earnings January 262023

Unusual Options Activity January 262023

Gold Prices Snap 5-Day Win Streak

Oil prices settled higher on Thursday, as investors remained hopeful that demand from China will pick up as the country eases Covid-19 restrictions. March-dated crude added 86 cents, or 1.1%, to settle at $81.01 per barrel.

Meanwhile, gold prices settled lower and snapped their five-day win streak. Strong GDP growth weighed on the yellow metal, with investors expecting the Federal Reserve to maintain a hawkish stance. February-dated gold shed $12.60, or 0.7%, to settle at $1,930 per ounce.

Published on Jan 26, 2023 at 3:05 PM
  • Quantitative Analysis

Energy stock Marathon Petroleum Corp (NYSE:MPC) is trading a new all-time high this afternoon, last seen 3.4% higher to trade at $134.14. Over the last 12 months, MPC added 88.6% and already stands more than 15% higher in 2023. Bullish traders shouldn't let their foot off the gas, though, as the stock flashes a historically bullish signal.  

The stock's highs come amid historically low implied volatility (IV) -- a bullish combination in the past. Per data from Schaeffer's Senior Quantitative Analyst Rocky White, there have been four similar times during the past three years, when the equity was within 2% of a 52-week high while its Schaeffer's Volatility Index (SVI) sat in the 20th annual percentile or lower. MPC's SVI of 34% that stands higher than just 14% of readings from the past year. 

The stock averaged a 5.5% return after 67% of those signals. What's more, the equity's Schaeffer's Volatility Scorecard (SVS) sits at an elevated 80 out of a possible 100. This implies the equity has exceeded option traders' volatility expectations during the past year.

An unwinding of pessimism in the options pits could also fuel tailwinds. The stock's 50-day put/call volume ratio of 0.96 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 96% of annual readings. So while calls still outpace puts on an overall basis, the appetite for bearish bets has rarely been healthier over the last 12 months.

Published on Jan 26, 2023 at 2:07 PM
  • The Week Ahead
          
Published on Jan 26, 2023 at 11:47 AM
  • Midday Market Check
 
Published on Jan 26, 2023 at 11:00 AM
  • Intraday Option Activity
  • Buzz Stocks

Options bulls are already responding to the results, with 730,000 calls exchanged so far -- double the volume that's usually seen at this point -- compared to 637,000 puts. Most popular is the weekly 1/27 60-strike call, followed by the 65-strike call in that series, with new positions being opened at both.

 
Published on Jan 26, 2023 at 10:53 AM
  • Buzz Stocks

Las Vegas Sands Corp (NYSE:LVS) stock is up 3.1% to trade at $56.72 at last glance, earlier as at $58.20 -- its highest level since June 2021. Though the casino name issued a disappointing fourth-quarter report, but did make positive comments regarding its reopening in Macao, leading several analysts to chime in with bull notes. CBRE upgraded LVS to "buy" from "hold," while no fewer than five other analysts chimed in with price-target hikes. 

The majority of analysts are bullish on LVS already. Of the 18 analysts in coverage, 14 now carry a "buy" or better rating after today's upgrade, while the 12-month consensus price target of $61.47 is an 8.5% premium to current levels. 

Options traders are targeting Las Vegas Sands stock at four times the intraday average after the news. So far, 15,000 calls and 10,000 puts have been exchanged, with the April 55 put seeing the most activity, followed by the April 55 call. 

Though short interest has been unwinding, down 8% over the most recent reporting period, it still represents 5.1% of the stock's available float. In other words, it would take nearly three days to buy back these bearish bets, at LVS' average pace of daily trading. 

Published on Jan 26, 2023 at 9:14 AM
  • Opening View

A host of U.S. economic data is due out today, with jobs data coming in at 186,000 -- its lowest level since April. Gross domestic product (GDP) expanded at a better-than-expected 2.9% annual rate for the fourth quarter, while durable goods orders rose 5.6% in December. Plus, the U.S. trade deficit widened to $90.3 billion last month from the previous month's $83 billion. 

Stock futures are on the rise, with futures on the Nasdaq-100 Index (NDX) up triple digits, as Tesla's (TSLA) earnings report gives the tech-heavy benchmark a boost. Dow Jones Industrial Average (DJIA) and S&P 500 Index (SPX) futures are moving higher as well. 

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

  • Behind Shopify stock's options surge
  • The latest Schaeffer's Market Mashup features Seth Golden of the Finom Group.
  • Plus, LEVI surges after earnings; CVX announces buyback plan; and PFE suffers a downgrade.

futures Jan26

5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw more than 1.2 million call contracts and 935,018 contracts traded on Wednesday. The single-session equity put/call ratio rose to 0.75 and the 21-day moving average stayed at 0.81.
  2. Levi Strauss & Co (NYSE:LEVI) is up 6.1% premarket, after the company's fourth-quarter results beat and strong forecast. BofA Global Research hiked its price target by $1 to $18 as well. Heading into today, the retailer is down 21.4% year-over-year. 
  3. Chevron Corp (NYSE:CVX) is down 1% before the bell, after the oil name reported a $75 billion stock buyback plan going into effect April 1st. The company also announced a dividend hike $1.51 from $1.42 per share. Year-over-year, the equity is up 35.1%. 
  4. UBS downgraded Pfizer Inc (NYSE:PFE) to "neutral" from "buy," with a price-target cut to $47 from $55, citing overzealous franchise estimates. PFE is down 1.8% in electronic trading, and already down 12% since the start of the year. 
  5. Today will bring the durable, and core capital goods orders, as well as the Chicago Fed national activity index and new home sales data.

buzzjan26

Plenty of Economic Data Out of Asia as Well

Asian markets were mixed today following the release of key economic data. Hong Kong’s Hang led the gainers, adding 2.4% with tech heavyweights leading the charge. In South Korea, fourth-quarter GDP experienced its first contraction in more than two years. Despite this, the Kospi tacked on 1.6%. Japan’s Nikkei fell 0.1%, after the Bank of Japan’s (BoJ) Summary of Opinions from last week’s meeting emphasized the need to keep its current monetary policy. The Shanghai Composite remains on holiday.

European stocks are higher this afternoon, with investors hopeful that a euro zone recession can be avoided. At last check, France’s CAC 40 is 0.8% higher and London’s FTSE 100 is up 0.3%. Germany’s DAX sports a fractional lead, despite improved business sentiment in the area.

Published on Jan 26, 2023 at 9:06 AM
  • Buzz Stocks

UBS downgraded Pfizer Inc. (NYSE:PFE) to "neutral" from "buy" this morning, citing lower Covid-19 expectations. The analyst also slashed its price target to $47 from $55, noting the pharmaceutical giant's Covid estimates need to drop, while its broader pipeline upside is minimal in the near- to-mid-term. PFE was last seen 1.4% lower premarket in response. The stock has shed 12% already in 2023, and hasn't posted a weekly win in over a month. 

In the options pits, short-term options traders are operating with a put-bias. This is per PFE's Schaeffer's put/call open interest ratio (SOIR) of 1.01, which stands higher than 87% of annual readings. 

Now looks like a good time to speculate on PFE's next move with options. Pfizer stock's Schaeffer's Volatility Index (SVI) of 26% stands in the 13th percentile of readings from the past year, suggesting options traders are pricing in low volatility expectations right now.

Published on Jan 25, 2023 at 4:30 PM
Updated on Jan 25, 2023 at 4:30 PM
  • Market Recap

Stocks managed to trim their losses this afternoon, with the Dow swinging into positive territory in the last hour of trading. The blue-chip index added nine points, but was off 460 points at session lows, after quarterly results from Boeing (BA) and Microsoft (MSFT). The latter's dismal guidance weighed on the tech sector, with the Nasdaq and S&P 500 both settling just below breakeven. Investors are also eyeing reports from Tesla (TSLA) and IBM (IBM) after the bell.

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

  • This aerospace stock drew a slew of bull notes.
  • Bear signal flashing for Southwest Airlines stock.
  • Plus, unpacking MSFT's revenue miss; 2 solar stocks downgraded; and SHOP options running red-hot.

Closing Index Summary January 252023

 NYSE and Nasdaq Stats January 252023

5 Things to Know Today 

  1. The Port of New York and New Jersey surpassed the nine-million cargo container mark for the first time, extending its streak of moving more trade volume each year since 2017. (CNBC)
  2. President Joe Biden formally announced the U.S. will send Abrams tanks to aid Ukraine's fight against Russian invasion, but delivery will take time. (MarketWatch
  3. Downbeat revenue forecast weighs on Microsoft stock.
  4. Barclays downgraded 2 solar stocks amid headwinds.
  5. Why options traders flocked to Shopify stock today.

Earnings January 252023

Unusual Options Activity January 252023

Gold Prices Extend Win Streak

Oil prices inched higher, despite the Energy Information Administration (EIA) reporting a 500,000-barrel increase in U.S. crude inventories for the week. March-dated crude added 2 cents to settle at $80.15 per barrel.

Gold prices settled higher as well to notch their fifth-straight daily win. Expectations that the Federal Reserve will have to slow the pace of rate hikes continued to blow tailwinds. February-dated gold rose $7.20, or roughly 0.4%, to settle at $1,942.60 per ounce.

Published on Jan 25, 2023 at 2:42 PM
  • Intraday Option Activity

Shopify Inc (NYSE:SHOP) is surging today, up 9.4% to trade at $46.73 at last check, after the company announced plans to increase its prices. Each plan's price is set to increase by roughly 33%, and will take effect for existing customers in April. 

Options traders are targeting Shopify stock after the news. So far, 184,000 calls and 105,000 puts have been exchanged, with overall volume running at triple the intraday average. The weekly 1/27 46-strike call is the most popular, followed by the 45-strike call in the same weekly series. 

SHOP surged on the charts yesterday before settling lower after it was rejected by the $50 level -- a trendline that acted as pressure last spring. Still, the equity is already up 35% since the start of 2023. 

SHOP Jan25

Options bulls have been targeting the security over the last 10 weeks. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), SHOP's 50-day call/put volume ratio of 2.42 ranks higher than 96% of readings from the past year. 

Published on Jan 25, 2023 at 2:35 PM
  • Earnings Preview
  • Quantitative Analysis

Ahead of its fourth-quarter earnings report, shares of Southwest Airlines Co (NYSE:LUV) are fractionally higher, last seen up 0.3% to trade at $36.77. However, LUV is trading near a historically bearish trendline that could add pressure in the next month.

Specifically, the equity is within one standard deviation of its 200-day moving average. 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. Southwest Airlines stock was lower one month later after every one of these signals, averaging a one-month loss of 10.1%. A similar move from the security's current perch of $36.65 would put LUV just above $116. 

LUV Chart January 252023

Southwest Airlines is slated to step into the earnings confession before the open tomorrow, Jan. 26, and analysts are anticipating fourth-quarter losses of 9 cents per share. The stock has a history of negative post-earnings responses, finishing five of eight next-day sessions lower, including a 6.4% dip in July. LUV averaged a move of 2.6% over the last two years, but this time around the options pits are pricing in a bigger swing of 5.7%, regardless of direction.

Speaking of the options pits, traders have favored bearish bets lately. This is per Southwest Airlines stock's 50-day put/call volume ratio of 1.65 that stands higher than all other annual readings, per data at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). What's more, LUV boasts a Schaeffer's put/call open interest ratio (SOIR) of 1.13 that stands above 100% of readings from the past year.

Those looking to join these traders could do so for a bargain right now. This is per the security's Schaeffer's Volatility Index (SVI) of 35% that stands in the relatively low 14% annual percentile. This implies options traders are pricing in low volatility expectations at the moment.

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