Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Apr 4, 2024 at 11:09 AM
  • Buzz Stocks

Levi Strauss & Co (NYSE:LEVI) stock is soaring to two-year highs, up 16.9% at $21.81 at last glance, earlier hitting a peak of $22.39. The retailer posted strong first-quarter earnings and stellar 2024 forecast thanks to direct customer sales and cost-saving measures, including job cuts and fewer promotions. Plus, no fewer than seven analysts lifted their price targets after the event. 

On track for its highest single-day percentage gain since March 2020, LEVI is up 33% since the start of the year. Recent support at the 40-day moving average has helped guide the shares higher, catching last session's pullback to the $18 level. 

Options traders are blasting LEVI in response. So far today, the stock has already seen 10.4 times its average daily options volume, with 21,000 calls and 18,000 puts exchanged. The April 20 put and April 22 call are the most popular positions, with new positions opening at the former. 

A sentiment shift appears to be occurring amongst traders as well, as there was plenty of pessimism to unwind headed into today. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), LEVI's 10-day put/call volume ratio of 2.72 ranks higher than 96% of readings from the past year, showing a strong penchant for puts over the past two weeks. 

It's also worth noting that short interest represents 11.4% of the stock's available float. It would take shorts roughly six days to cover their bets, at LEVI's average pace of trading. 

Published on Apr 4, 2024 at 10:51 AM
  • Buzz Stocks

Evercore ISI upgraded Wayfair Inc (NYSE:W) stock to "outperform" from "in line" and lifted its price objective to $80 from $65 this morning. The brokerage firm highlighted the e-commerce name's potential to steal market share as the home furnishing business recovers. At last check, W is 3.9% higher at $64.83.

The $72 level has acted as a ceiling for the equity since September, more recently rejecting its late March rally. Meanwhile, the 20-day moving average has guided shares higher. Now on track to snap a three-day losing streak, Wayfair stock is up more than 88% in the last 12 months. 

There is still plenty of room for analysts to hop on the bullish bandwagon, with 13 of the 30 in coverage still sporting a tepid "hold" rating. A short squeeze could also come into play, as 24.9% of the equity's available float is currently sold short. It would take these bears over a week to cover their bets, at W's average pace of trading.

The options pits are far more bullish. This is per the stock's 10-day call/put volume ratio of 2.97 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits higher than 98% of annual readings.

Now is the time to bet on the stock's next moves with options, since premium players are currently pricing in low volatility expectations. In fact, the security's Schaeffer's Volatility Index (SVI) rating of 61% ranks higher than only 10% of readings from the past year.

Published on Apr 4, 2024 at 10:29 AM
  • Analyst Update
Published on Apr 4, 2024 at 9:17 AM
  • Opening View

Stock futures are notably higher Thursday, following a sluggish day after comments from Federal Reserve Chairman Jerome Powell. Futures on the Dow Jones Industrial Average (DJIA) are up 137 points after the index yesterday turned in its third-straight daily loss, while Nasdaq-100 Index (NDX) futures are also up triple digits. 

Jobs data dropped today, showing jobless claims rose last week to their highest level since late January. Plus, per the Commerce Department, the trade deficit jumped to $68.9 billion last month, which is higher than economists anticipated and the biggest imbalance since April 2023.

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

Futures Chart April 42024

5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw more than 1.2 million call contracts and 857,903 put contracts exchanged Monday. The single-session equity put/call ratio rose to 0.69, while the 21-day moving average remained at 0.71.
  2. Clothing retailer Levi Strauss & Co (NYSE:LEVI) stepped into the earnings confessional after the close last night, where it topped first-quarter earnings and revenue expectations. The company also raised its full-year profit guidance, which led to seven price-target hikes. Up 13.7% in premarket trading, LEVI is looking to add to its 12.8% year-to-date lead.
  3. Evercore ISI upgraded Wayfair Inc (NYSE:W) stock to "outperform" from "in line" and lifted its price objective to $80 from $65, highlighting the e-commerce retailer's potential to steal market share as the home furnishing business recovers. Up 5.4% ahead of the open, W already sports an impressive 74.1% year-over-year gain.
  4. Shares of Hertz Global Holdings Inc (NASDAQ:HTZ) are down 3.7% before the bell, after Goldman Sachs downgraded the stock to "sell" from "neutral." The analyst noted near-term pressures for the car rental firm have likely not been fully priced in yet. Coming into today, HTZ was already down 26.6% in 2024.
  5. Plenty of economic data is due out this week, including several speeches from the Federal Reserve. 


Asian Markets React to Stateside Interest Rate Comments

With Hong Kong and China closed for public holiday, Asian bourses parsed through Fed Chair Jerome Powell’s latest interest rate rhetoric. Hong Kong retail sales came in 1.9% higher year over year for February, while South Korea’s Kospi added 1.3%, thanks to outsized post-earnings move from Samsung Electronics. Japan’s Nikkei gained 0.8%, briefly regaining but finally ceding the 40,000 mark. An ex-currency diplomat remarked that Japan will not intervene in the currency market, despite the yen declining against the dollar.

Over in Europe, stocks are cautiously higher, with investors keen for the notes from the European Central Bank’s (ECB) latest meeting notes. At last check, London’s FTSE 100 was up 0.4%, the French CAC 40 was off by 0.1%, and the German DAX was marginally higher.

Published on Apr 3, 2024 at 4:29 PM
  • Market Recap
Published on Apr 3, 2024 at 2:30 PM
  • Quantitative Analysis

Health insurance stocks slid yesterday, after final Medicare Advantage (MA) payment rates fell below expectations. The news also impacted CVS Health Corp (NYSE:CVS) stock, which staged a 7.2% drop -- its worst daily percentage loss since August. Shares are only modestly higher in today's recovery -- up 0.7% at $74.37 at last glance. 

For those looking to buy the dip, however, the recent pullback has CVS within one standard deviation of its 200-day moving average, a trendline with historically bullish implications. According to Schaeffer's Senior Quantitative Analyst Rocky White, the equity has seen two similar signals in the past three years, after which it was higher one month later each time, averaging a 3% gain.  

CVS Apr3

Furthermore, CVS Health stock's 14-day relative strength index (RSI) of 29.4 is in "oversold" territory, which is typically indicative of a short-term bounce. The stock had been climbing before yesterday's gap lower, which was only its third daily loss since March 14. Since the start of the year, CVS is down 5.7%. 

Published on Apr 3, 2024 at 12:23 PM
  • Quantitative Analysis

Shares of cloud computing firm Nutanix Inc (NASDAQ:NTNX) are rebounding this afternoon, last seen 3.8% higher at $63.44. The stock erased 4.2% last week and fell 1.9% during yesterday's trading, pulling away from its March 8 record high of $66.99. Today's pop looks like it could be the beginning of a longer-term surge higher, if history is any indicator.

The recent pullback put NTNX within one standard deviation of its 50-day moving average, after a lengthy stretch trading north of this trendline. Over the last three years, five similar pullbacks occurred, all of which resulted in the stock moving higher over the next month, per Schaeffer's Senior Quantitative Analyst Rocky White. Nutanix stock averaged a one-month pop of 12%, so a move of similar magnitude would put it at a new all-time high above the $71 area.

NTNX Chart April 032024

For anyone considering speculating on a NTNX bounce with call options, now is a good time to do so. The stock has a Schaeffer's Volatility Index (SVI) of 41%, which ranks in the 26th annual percentile. This reveals that unusually low volatility expectations are being priced into front-month options for the software stock.

Published on Apr 3, 2024 at 11:47 AM
Updated on Apr 3, 2024 at 11:50 AM
  • Midday Market Check


Published on Apr 3, 2024 at 10:34 AM
  • Buzz Stocks

Thanks to strong demand, egg producer Cal-Maine Foods Inc (NASDAQ:CALM) announced better-than-expected fiscal third-quarter revenue after the close yesterday. Cal-Maine Foods stock is surging after the news, despite the company also temporarily closing a facility in Texas due to an outbreak of the bird flu. 

After gapping to fresh 52-week high of $63.14, CALM was last seen up 4.8% at $61.74. The equity is up 10.1% in the last 12 months, and is bouncing off a pullback to the $55 region.

Despite low absolute volume, CALM has 264 calls and 204 puts cross the tape so far today, which is double the average daily volume. The April 65 call is the most popular, followed by the April 62.50 put.

Short covering could account for some of today's price action, as short interest represents 9.7% of the stock's available float. It would take shorts more than six days to buy back their bearish bets, at the security's average pace of trading. 

Analysts have yet to chime in, though there is plenty of room for optimism. Two of the three analysts in coverage carry a "hold" or worse rating on CALM, while the 12-month consensus price target of $62.50 sits at a discount to current levels. 

Published on Apr 3, 2024 at 10:28 AM
  • Analyst Update

Shares of consumer lending stock Ally Financial Inc (NYSE:ALLY) are down 0.7% at $38.76 at last glance, following a bear note from J.P. Morgan Securities. The analyst downgraded ALLY to "underweight" from "neutral," after saying the consumer finance sector re-rated "too quickly," resulting in a disproportion between fundamentals and valuations. 

However, J.P. Morgan Securities also added that investors should seize the opportunity to take advantage of the recent rally before earnings, and increased its price target on Ally Financial stock to $39 from $37. Coming into today, analysts were split on the equity, with eight calling in a "buy" or better and 11 rating it a "hold" or worse.

Over in the options pits, calls are all the rage. Ally Financial stock's 50-day call/put volume ratio of 1.52 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than all other readings from the past 12 months. Echoing this, ALLY's Schaeffer's put/call open interest ratio (SOIR) sits in the low 15th percentile of annual readings, implying a call-bias amongst short-term options traders as well. The shares could suffer should this optimism begin to unwind. 

Betting on ALLY's next move with options looks like a good route to take. This is because premium players are pricing in low volatility expectations, per the security's Schaeffer's Volatility Index (SVI) rating of 41% that ranks higher than just 23% of readings from the past year.

On the charts, Ally Financial stock continues to pull back from its March 21, nearly two-year high of $41.56. The $39 level previously acted as a floor for this retreat, but $38 is now stepping up to try and provide support. Plus, ALLY is still up 10.6% and 49.5% year to date and year over year, respectively. 

Published on Apr 3, 2024 at 10:28 AM
  • Buzz Stocks

Wolfspeed Inc (NYSE:WOLF) stock is down 4.9% to trade at $26.38 at last check, after a downgrade from Wells Fargo to "equal weight" from "overweight," and a price-target cut to $30 from $55. The analyst in coverage noted weaker-than-expected demand for silicon carbide devices, higher supplies, and the company's lack of profitability.

The security has struggled with a ceiling at the $30 level since February, while pressure from its 60-day moving average has been in place since January. While the shares managed to distance themselves from a Feb. 23, seven-year low $23.77, they still sports a 55.3% year-over-year deficit. 

Short interest is up 1.8% over the last two reporting periods, and the 19.64 million shares sold short already accounts for 15.8% of Wolfspeed stock's available float. It would take shorts more than four days to buy back their bearish bets, at the equity's average pace of trading. 

It's also worth noting the security's Schaeffer's Volatility Scorecard (SVS) ranks at an elevated 9 out of 100. This means WOLF tends to exceed traders' volatility expectations. 

Published on Apr 3, 2024 at 9:24 AM
  • Opening View

Stock futures are looking to extend yesterday's losses after a better-than-expected ADP employment report for March. According to the payrolls processing firm, private companies added 184,000 workers last month, surpassing expectations of 155,000. Bond yields surged in response to this indicator of a strong labor market, which may encourage the Federal Reserve to hold off on cutting interest rates in the near term.  

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

  • Schaeffer's Senior Quantitative Analyst Rocky White weighs in on a strong first quarter.
  • The newest meme stock is falling fast.
  • Plus, TSLA continues to fall; WOLF downgraded; and Intel's growing operating losses.

Futures Chart April 32024

5 Things You Need to Know Today

  1. Due to technical issues, there is no Cboe Options Exchange (CBOE) data for yesterday's session.
  2. Tesla Inc (NASDAQ:TSLA) stock is 1.4% lower ahead of the open, adding to a 5.2% weekly loss that followed weak deliveries. TSLA attracted several price-target cuts today, including one from J.P. Morgan Securities to $115 from $130. So far this year, Tesla stock shed 33%.
  3. Wolfspeed Inc (NYSE:WOLF) also attracted a bear note from Wells Fargo thanks to its exposure to Tesla and weaker-than-expected silicon carbide device demand. The analyst downgraded Wolfspeed to "equal weight" from "overweight" and cut its price target by $25 to $30. Down 3.6% in premarket trading, WOLF is 55.5% lower in the last 12 months.
  4. Speaking of chip names, shares of Intel Corp (NASDAQ:INTC) are down 5.3% before the bell, after the company showed losses are mounting in its chip-making unit. Specifically, Intel's operating loss of $7 billion in 2023 was up from $5.2 billion in the year prior. INTC is already down 12.6% for 2024.
  5. Plenty of economic data is due out this week, including several speeches from the Federal Reserve. 


Euro Zone Inflation Eased in March

Markets in Asia slipped in today’s trading, with electric vehicle (EV) stocks weighing on the heels of demand trouble. Meanwhile, China’s service sector activity grew from 52.5 to 52.7 in March. For Wednesday, Japan’s Nikkei shed 1%, Hong Kong’s Hang Seng lost 1.2%, China’s Shanghai Composite fell 0.2%, and South Korea’s Kospi dropped 1.7%.

Across the pond in Europe, stocks are mixed after Euro zone inflation data eased to 2.4% last month compared to estimates of 2.6%. At last check, London’s FTSE 100 is off 0.3% and both France’s CAC 40 and Germany’s DAX are up 0.2%.

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