Earnings Season Highlights

Refresh your browser for the latest updates!
A collection of noteworthy post-earnings reactions
Published on Jun 17, 2022 at 9:00 AM
  • Trader Content

The below is an excerpt from this past Monday's episode of Schaeffer's Playbook of the Week, featuring Schaeffer's Senior Market Strategist Bryan Sapp, CFA. Below, Matt makes a short-term bearish case for Honeywell International Inc (NASDAQ:HON).

"My Stock of the Week pick this week is bearish. It's going to be Honeywell. The company had held up fairly well since the beginning part of this year. But we've seen some relative weakness here in the last couple of weeks. Now it's down roughly 10% in 2022. The $185- level has been key key support since the beginning of April. It was breached in premarket. There's been multiple tests here and concept I've been hammering home last few weeks is that the more than a level is tested, the more likely it is to eventually break. When key levels are broken on gaps, that is something that you need to pay very close attention to.

So we're gapping down to $183 right now and that's going to be your immediate resistance overhead. That's going to be the first line of defense for your short. We're losing the trendline from February; just look at the February lows from $224, draw a trendline on those lows and connect those to the May lows. We are now below there.

The shorter term uptrend -- I guess that we could call it that since February -- is now broken. You could expect some sort of continuation move down from here and you have some structure to trade against. Honeywell reported earnings in late April. They were good, but not  phenomenal.

However, we're now trading back below those pre-earnings levels. If you have a sharp move in either direction, higher or lower after earnings, and then the stock rolls back over around If it was a sell off on earnings and takes that level out from the opposite side, then I think that's generally a pretty good sign of a reversal.

Now HON has given up that entire rally that we saw from the earnings. You could have people that were shorting against that level. And that's going to provide some resistance there when you have active market participants trading against that.

Lastly, the analysts are very bullish; six "buy" ratings, eight "hold" ratings, and not a single "sell." We've discussed at length how analysts are reactive and not proactive. So in the event that Honeywell does roll back over and the market continues to be weak, the potential for downgrades rises, and that would continue capping the factor that will push the shares down even lower.

The short trade here that I like has a stop above $190. If you want to be very, very aggressive with this, I think you can stop out on a close above $185. Given that that was that key support resistance level, I generally would want to give a little more room on my trade than that. My first target is $175. However, my primary target on this is going to be $165 and in the event that you hit it, take some profits and then leave a little runner position on for continued downside moves."

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 Jun 17, 2022 at 8:00 AM
  • Strategies and Concepts

Juneteenth Stock Market Holiday Facts

by Schaeffer's Digital Content Team

On June 19th, 1865, Union soldiers arrived in Galveston, Texas with news that the Civil War had ended and that all slaves were now free. This day is celebrated each year as Juneteenth, and is considered to be the oldest known celebration of the end of slavery in the United StatesJuneteenth was recognized as a federal holiday on June 17, 2021, when U.S. President Joe Biden signed the Juneteenth National Independence Day Act into law.

But what does this have to do with the stock market? With Juneteenth officially a federal holiday now, the stock market is closed for the day to commemorate this important day in American history.

What is the History Behind the Juneteenth Holiday?

Juneteenth, also known as Freedom Day or Emancipation Day, commemorates the day that news of the Emancipation Proclamation reached Texas in 1865. The Proclamation, which went into effect on Jan. 1, 1863, declared that all slaves in the United States were to be freed. However, in some U.S. areas without a heavy Union presence, the declaration was unable to be upheld. On June 19, 1865, Union Major Gen. Gordon Granger brought the news to Galveston, Texas, the last state to hold on to institutional slavery. 

Today, Juneteenth is celebrated on June 19th across the country. It is a time to reflect on the past and to celebrate the progress that has been made toward equality for all Americans.

Is the Stock Market Open or Closed on the Juneteenth Holiday?

All U.S. stock markets are closed in observance of the Juneteenth. This includes The New York Stock Exchange (NYSE), Nasdaq, Dow Jones Industrial Average (DJIA), S&P 500 (SPX), and more.

This year Juneteenth falls on a Sunday, so the holiday will be recognized on Monday, June 20, 2022. As a result, the U.S. stock markets, including the Nasdaq and New York Stock Exchange, will be closed for the full day. The stock market will reopen as normal at 9:30 a.m. ET on Tuesday, June 21, for a holiday-shortened week. Juneteenth has been gaining popularity in recent years, and advocacy groups such as the Juneteenth Foundation are working to raise awareness of this important day in American history.

The day off from trading on Juneteenth gives traders, investors, and others tied to stock market hours to celebrate and commemorate the emancipation of enslaved African Americans as part of the holiday.

What about Bonds? Are Bond Markets Open or Closed on the Juneteenth Holiday?

Both the bond market and stock market are closed in observation of the Juneteenth holiday.

As the First Year of Juneteenth as a National Holiday, How Might You Observe Juneteenth?

Juneteenth, also known as Freedom Day or Emancipation Day, marks the day when enslaved African Americans in Texas captured their freedom. While this historic event happened more than 150 years ago, it remains an important day of remembrance and celebration.

There are several ways you can properly honor Juneteenth and support the community with the following organizations and virtual opportunities: 

  • The National Museum of African American History & Culture is hosting an online celebration called, Juneteenth: A Celebration of Resilience. According to their website, the virtual viewing spans two days, from June 19 to June 20. Museum-goers will be able to enjoy a variety of performances, workshops, and panel discussions that focus on the history and significance of Juneteenth. In addition, the museum has put together an interactive timeline that walks online users through the history of Juneteenth and its significance today. The timeline features a variety of primary sources, such as documents, photographs, and audio recordings, that help to bring the story of Juneteenth to life. Whether you're a history buff or simply looking to learn more about this important holiday, the National Museum of African American History & Culture's Juneteenth celebration is sure to offer something for everyone.

  • Step Afrika!, the first professional company in the world dedicated to the tradition of stepping, is calling viewers to its virtual theater for a Juneteenth performance which will broadcast at 8 p.m. ET on the June 19 holiday. The event will premiere three special works entitled, Trane, Little Rock Nine, and The Movement. Stepping is a dance style that was created by African American college students in the early 20th century and uses the body as an instrument of percussive sound.

  • Outdoor Afro encourages connections of Black and African American individuals to nature. It is a great way to connect with nature, and the company's mission is an important one. "We encourage everyone to take some time to consider what freedom means to them, and to reflect on the legacy of those who were denied their freedom in America."

  • The Juneteenth Foundation is a non-profit organization that works to promote the holiday and its history. Every year, the Juneteenth Foundation hosts a festival weekend to celebrate Juneteenth. This year's festival will be both in person and virtual and will include panel discussions, a career fair, and a Juneteenth Freedom Festival. The Juneteenth Foundation is committed to promoting Black advancement and ensuring that everyone has access to equitable opportunities. The Juneteenth festival is a great way to learn more about the holiday and its importance.

Published on Jun 17, 2022 at 8:00 AM
  • Quantitative Analysis
  • Editor's Pick

The latest CPI reading ultimately threw a wrench into any hope that the Fed would back off from its initially hawkish interest rate stance. It's brutal out there; gas prices are above $5, the Ukraine-Russian war slogs on, and even the coronavirus continues to linger. Everywhere you look, especially as it pertains to stock market news, there are negative headlines. As contrarians, we're here to remind investors that there's opportunity in rampant pessimism.

In last Monday's Playbook of the Week, Schaeffer's Senior Market Strategist Bryan Sapp showed charts that signify just how dreary sentiment is. Below is an excerpt:

"I got this chart below from SentimenTrader, and I thought this was really interesting. Everyone is calling this a bear market rally. The top chart is the S&P 500 going back to 2012, and then this bottom histogram is a volume chart. It's the number of news articles that have been published that have 'bear market rally' as the topic. As you can see, we're way above bear market rally calls from the Covid selloff, when we got the sharp move off the lows.

COTW Sentiment

If you look now versus the pandemic, people are much more bearish, or at least writers are writing much more bearishly than what they were couple of years ago. This, in turn will have an effect on investor sentiment. If everyone's reading the Wall Street Journal, the Financial Times, MarketWatch, whatever it may be, subconsciously to some extent that will bleed into people's psyche. I don't necessarily disagree; all I'm saying is that sentiment in the very short term has gotten very bearish. And despite the big rally we had two weeks ago, sentiment really hasn't flipped much since.

I also thought this was very interesting; Senior Quantitative Analyst Rocky White does an aggregate short interest reading for all stocks, and he likes to look at the indices to see where big money is shorting and where big money is buying. If you look at the below S&P 500 Index (SPX) chart, the red line is total short interest. This has been trending lower as the market has been trending higher. Short interest really, really rose after the housing bubble and this was a multi-year thing. And it's just slowly been sort of working lower as the market has risen since.

SPX Sentiment

Compare that to the chart below. This is the Russell 2000 Index (RUT) short interest. Total short emphasis on the Russell 2000 stocks right now is at an all-time high. We're at over eight billion shares sold short, and this has been trending higher. I thought that discrepancy was very noteworthy. Hypothetically, let's just say CPI comes in way below expectations on Friday, that would most likely put a huge bid into the market. And the stocks that would most likely benefit the most from that are these highly shorted Russell 2000 stocks. So just something to keep in mind; if sentiment flips, on the whole, if everyone gets really constructive, and everyone gets really bullish, I think there's going to be a really good opportunity on the long side to buy some of these highly shorted, beaten down small cap names."

RUT Sentiment

Narrator: CPI did not come in way below expectations on Friday. But that doesn't necessarily throw cold water on Sapp's comments above. The sentiment readings he called out could conceivably get even more bearish. It's already happening; the University of Michigan consumer sentiment survey on Friday hit an all-time low. The Cboe Volatility Index (VIX) on Friday got as close to 30 as its been in three weeks. Also consider Investors Intelligence (II) data for June 3, where bulls are below their long term average since 2005, while bears are much higher than the long-term average. This was a week ago, when the Dow and SPX were fresh off monthly wins. Imagine how bold bears will be now that there's dismal inflation to back up their pessimism.

II COTW

Just because everyone is saying 'bear market' in the news doesn't necessarily mean they're incorrect. In Sapp's words, "the trend is still down, this is not a time to say, okay, everyone's negative, we're rallying the bottoms." But just how Bernie Schaeffer beat Jim Cramer to the Hershey's (HSY) breakout a few months ago, an investor that can understand the impact of how sentiment can build and subsequently unwind can find themselves well-positioned to stay ahead of the trend.

Schaeffer's has a new product we are excited to share! Playbook of the Week, delivered every Monday, is an exclusive 30-45 minute live trader panel. It features the trading expert’s take on the current market and hot sectors, a primer on specific usage of Schaeffer’s proprietary trading analysis, a deep-dive into an equity at the top of our watchlist for the week, and a complete question-and-answer session.

Subscribers to Chart of the Week received this commentary on Sunday, June 12.

Published on Jun 17, 2022 at 7:02 AM
  • Buzz Stocks

Today's Stock Market News & Events: 6/17/2022

by Schaeffer's Digital Content Team

**REMINDER: THE STOCK MARKET WILL BE CLOSED FOR THE FULL SESSION ON MONDAY, JUNE 20, IN OBSERVANCE OF THE JUNETEENTH HOLIDAY. PLEASE MANAGE YOUR OPEN POSITIONS ACCORDINGLY.**

Today will feature capacity utilization, leading economic indicators, and the industrial production index.

There are no public companies slated to release corporate earnings today, June 17.

Looking ahead to next week, investors can expect a brief respite next week. U.S. markets will be closed on Monday in observance of Juneteenth, while jobs data and purchasing managers indexes (PMIs) will hold the bulk of investors' attention later in the week. Next week's earnings docket features a few names, with CarMax (KMX)Carnival (CCL)Darden Restaurants (DRI)FedEx (FDX), KB Home (KBH), La-Z-Boy (LZB), Lennar (LEN)Rite Aid (RAD), Smith & Wesson Brands (SWBI), and Winnebago (WGO) slated to report.

Markets are closed on Monday, June 20, in observance of Juneteenth. On Tuesday, the Federal Reserve Bank of Chicago's national activity index will be released, alongside an existing home sales report.  

All economic dates listed here are tentative and subject to change.

Now, imagine if there was a "magic" secret to trading stock options that could remove almost all the risk out of a trade while giving you an opportunity to gain 100% or more on each contractAlso, imagine doing that in only a few minutes of "work" on a single Friday each month.

Now stop imagining...  On one "Red Hot Friday" each month (TODAY!!), you could have 3 to 5 opportunities to break the typical rules of option trading everyone else uses with the potential to make obscene returns. You'll do it by leveraging the power of something I call the "stack" strategy. Click here to get the details and get your name on the list before 12pm ET!

Published on Jun 16, 2022 at 4:28 PM
  • Market Recap

Investor sentiment once more turned sour on Thursday. Concerns surrounding the Federal Reserve’s aggressive interest rate hikes took hold, and fears of an economic recession settled in. Lackluster economic data pressured stocks lower as well. The Dow shed 741 points -- breaching the 30,000 level for the first time in over a year -- while closing at its lowest level since December 2020. Meanwhile, the Nasdaq joined the S&P 500 in official bear market territory as the tech sector sold off.

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

  • Options bears flock to Lennar stock before earnings.
  • It's not looking good for United Parcel Services stock.
  • Plus, one stock immune to inflation; new coverage on media stock; and more on Kroger's beat-and-raise.

The Dow Jones Average (DJI -  29,927.07) shed 741.5 points, or 2.4%, for the day. Walmart (WBA) led the gainers, adding 1%. American Express (AXP), meanwhile, paced the laggards with a 6% drop.

The S&P 500 Index (SPX - 3,666.77) lost 123.2 points, or 3.3% for the day. Meanwhile, the Nasdaq Composite (IXIC - 10,646.10) fell 453.1 points, or 4.1% for the session.

Lastly, the Cboe Market Volatility Index (VIX - 32.95) rose 3.3 points, or 11.2% for the day.

nyse and nasdaq june 16

nyse and nasdaq jun 16

5 Things to Know Today

  1.  American Airlines (AAL) and other airline stocks pummeled today, with inflation fears and the risk of recession overshadowing summer travel demand. (CNBC)
  2. A Food and Drug Administration (FDA) panel gave the green light for children under 5 to get the Moderna (MRNA) or Pfizer (PFE) Covid-19 shot. (MarketWatch)
  3. Morgan Stanley turned bullish on Dollar General stock.
  4. Warner Brothers Discovery stock sank on fresh analyst coverage.
  5. Kroger brushed off inflationary pressures with a beat-and-raise.

earnings jun 16uvol jun 16

Oil Prices Settle Higher After New Sanctions

Oil prices were higher on Thursday, reversing earlier losses. Boosting black gold was news that the U.S. Treasury Department sanctioned petrochemical producers in Iran, and other "front companies" overseas involved in the sale of Iranian petrochemicals. July-dated crude rose $2.27, or 2%, to settle at $117.58 per barrel.

Gold prices settled higher as well for a second-straight day, as investors flocked to the safe-haven commodity amid a weakening dollar. August-dated added $30.30, or 1.7%, to close at $1,849.90 an ounce.

Published on Jun 16, 2022 at 3:19 PM
  • Strategies and Concepts
  • Podcast
  • Editor's Pick

OCC Principal and OIC Instructor Mark Benzaquen joined Market Mashup this week for a very educational rundown of options strategies. Mark shows Patrick how options help risk mitigation (), what verticals debit spreads can do to elevate a portfolio, (), and offers advice on staying in the market right now (). Plus, Mark details what's new at OCC/OIC and his top five drummers of all-time!

Here's the full episode here:

 

 

Do not... I repeat, do NOT miss out on the opportunity to join Bernie Schaeffer's latest trading program starting this Thursday!! Here is more information so you can see that joining is simply a NO BRAINER. Click here to join by Friday, June 16, for charter membership discounts!

Here is a list of our most recent episodes, too:

 

Published on Jun 16, 2022 at 3:16 PM
  • Video Content
  • Editor's Pick

Schaeffer's Senior Market Strategist, Matthew Timpane CMT, was a featured presenter at Benzinga's June Trading Boot Camp The full recording can be found below. Take a look below to hear more about the best approach for trading options in this crazy volatile market environment, including a primer on Schaeffer's proprietary Expectational Analysis ®.

Published on Jun 16, 2022 at 2:52 PM
  • Quantitative Analysis

 

 
Published on Jun 16, 2022 at 2:42 PM
  • Earnings Preview

Software name Adobe Inc (NASDAQ:ADBE) is pulling back ahead of the release of its second-quarter earnings report, which is due out after the close today. ADBE was last seen down 2.9% at $366.01, though it's managed to pullback from earlier losses that had the equity trading at its lowest level since May 2020. Now down 35.5% in 2022, and once again staring up at the 60-day moving average, now looks like the perfect time to dig more into Adobe stock's options activity, as well as how the equity has fared after earnings in the past.

ADBE Chart June 16

The equity's options pits are seeing increased activity leading up to the event. At last check, 13,000 puts and 12,000 calls have been exchanged, which amounts to double the intraday average. The two most popular contracts today are the June 400 call and the 300 put from the same series, while the September 390 call is the top open interest position.

A more broad look shows options traders have favored puts in recent weeks. This is per ADBE's 50-day put/call volume ratio of 1.14 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 73% of readings in its 12-month range.

A quick glance at Adobe stock's last eight post-earnings moves shows the stock tends to shift lower after earnings, as six of those next-day sessions were negative. In fact, the equity saw losses following its last three earnings reports, including a 10.2% drop in December and a 9.3% dip in March. ADBE averaged a post-earnings swing of 4.7% in the past two years, regardless of direction. This is nearly half the 8.9% swing the options pits are pricing in this time around. 

Published on Jun 16, 2022 at 1:34 PM
  • Earnings Preview

The shares of Lennar Corporation (NYSE:LEN) are down 5.9% at $64.98 at last check, as investors prepare for the homebuilding company's second-quarter earnings report, which is due out before the open on Tuesday, June 21. Several factors are working against LEN ahead of the event, including today's broad-market slump, and a rise in the 30-year fixed-rate mortgage to 5.78% from last weeks 5.23%, marking its biggest one-week jump in 35 years.

A price-target cut from UBS isn't helping matters, after the analyst lowered its objective to $108 from $154. Several of Lennar's competitors received similar price-target cuts, including Toll Brothers (TOL) and KB Home (KBH). The analyst noted that these stocks are "not only telling us the housing cycle is over, but that big volume declines, price declines and land impairments are ahead."

A closer look at analyst sentiment shows most covering brokerages are still optimistic on the equity, with eight of the 11 in coverage calling it a "buy" or better. What's more, the 12-month consensus price target of $110.19 is a 69.7% premium to current levels. 

Considering Lennar stock's technical setup, more downgrades could follow its upcoming earnings report. The security has lost 44.2% in 2022, and 29% in the past 12 months. Today's drop puts LEN at its lowest level since July 2020. The shares are also eyeing their seventh-consecutive drop, following a failure at the 80-day moving average. 

len chart june 16

The equity does have a pretty upbeat post-earnings history over the past two years, nabbing five next-day wins, compared to just three losses. The stock has averaged a move of 4.4% after these eight instances, regardless of direction. This time around, the options pits are pricing in a 7.5% next-day move for the stock. 

Speaking of options pits, Lennar's are seeing an unusual amount of bullish activity today. So far, 3,515 puts have been exchanged, which is double the intraday average, and more than four times the number of calls traded in the same time period. The most popular contract is the June 65 put, which expires tomorrow, followed by the July 50-strike put, with positions being opened at both. 

Published on Jun 16, 2022 at 1:00 PM
  • The Week Ahead
 
Published on Jun 16, 2022 at 12:11 PM
  • Midday Market Check

Yesterday's market rally was woefully short lived, with stocks resuming their selloff in a big way. The Dow Jones Industrial Average (DJI) was last seen down 669 points, and earlier touched its lowest level since December 2020. The Nasdaq Composite (IXIC) and S&P 500 Index (SPX) are also burrowing lower, with the former falling to its lowest level since September 2020, and the latter touching its lowest level since December 2020 as well. Investors are now fearful that the Federal Reserve's aggressive rate hikes could lead to a recession. 

On the economic data front, housing starts fell 14% in May, marking a much deeper drop than the 2.6% decline economists expected. Plus, the Philadelphia Fed Business Index turned in its first contraction since May 2020, coming in at a negative reading of 3.3. Meanwhile, weekly jobless claims posted a more modest decline than Wall Street anticipated.  

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

    • Behind Kroger's first-quarter beat-and-raise
    • Why one analyst is recommending Dollar General stock
    • Plus, bears circle sinking AAL; LYT soars after IPO; and EBIX plummets on short report.

    midday stats june 16

    American Airlines Group Inc (NASDAQ:AAL) is seeing an uptick in bearish options activity today, with 113,000 puts across the tape so far, which is double what is typically seen at this point. The two most popular contracts by far are the January 2023 9- and 12-strike puts, with positions being opened at the former. AAL was last seen down 8.1% at $12.24, and earlier hit an annual low of $12.20. The flight sector is selling off ahead of a virtual meeting between airline chief executives and U.S. Transportation Secretary Pete Buttigieg, which will cover the summer travel season and disruptions in the industry. 

    aal jun 16

    One of the best stocks on the Nasdaq today is Lytus Technologies Holdings Pbt Ltd (NASDAQ:LYT). The security was last seen up 38.6% at $23.57 on its second day as a publicly traded company, after soaring as high as 350% on Wednesday afternoon. The telehealth name held a downsized initial public offering (IPO) yesterday, raising $12.4 million. Lytus priced its stock at $4.75 per share, and the equity opened at $20. 

    One of the worst stocks on the Nasdaq is Ebix Inc (NASDAQ:EBIX). The equity was last seen down 38.3% at $14.43, after Hindenburg Research put out a new short report, pointing out the tech firm's "massive near-term debt load," and expressing concern over rising interest rates. The shares are trading at their lowest level since April 2020, and have shed 54% in the past 12 months. 

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

    1640638248

     
    Special Offers from Schaeffer's Trading Partners


    MORE | MARKETstories


    This 60-Second Trade Makes Instant Cash Hit Your Account… Every Single Time
    Trade Like THIS to Put Up to $2,880 “On Loop” In Income
    Holiday-Shortened Week Ekes Out a Rally
    All three major benchmarks were set to snap a three-week losing streak
    Put Traders Circle Soaring Zendesk Stock After Buyout
    Zendesk will be acquired in a $10.2 billion deal
    This 60-Second Trade Makes Instant Cash Hit Your Account… Every Single Time
    Trade Like THIS to Put Up to $2,880 “On Loop” In Income