Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
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
 
Published on Jan 23, 2023 at 11:46 AM
Updated on Jan 23, 2023 at 11:47 AM
  • Most Active Weekly Options

Roughly a week before its earnings report, United States Steel Corporation (NYSE:X) has seen an unusual uptick in options activity.

Specifically, X just showed up on Schaeffer's Senior Quantitative Analyst Rocky White's list of S&P 400 (SP400) members with the highest option volume over the past two weeks. During this time period, 227,870 calls and 159,019 puts were exchanged. The most popular position was the February 30 call, followed by the June 18 put. 

MAO Chart January 232022

The company is slated to report fourth-quarter results after the close on Thursday, Feb. 2, and analysts anticipate earnings of 62 cents per share on revenue of $3.94 billion. U.S. Steel stock has a generally upbeat history of post-earnings reactions, finishing five of eight next-day sessions higher, including a 9% pop in July. This time around, markets are pricing in an 8.3% move for the shares, regardless of direction -- higher than the 6% swing averaged over the last two years.

At last check, the steel producer's shares were fractionally higher, and once again breaking above the $28 level. A small early November bull gap saw the stock bounce above its 140-day moving average, which pressured the shares since the beginning of May. In the last 12 months, X has managed to add nearly 47%.

MAO X Chart January 232022

A continued unwinding of pessimism in the options pits could provide United States Steel stock with some much-needed tailwinds. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity sports a 50-day put/call volume ratio of that stands higher than 78% of readings from the past year. This indicates that, while calls are outpacing puts on an overall basis, the latter were picked up at a faster-than-usual clip over the last 10 weeks.

Echoing this, short-term options traders have been much more put-biased. This is per X's Schaeffer's put/call open interest ratio of 1.49 that stands higher than 75% of annual readings. 

Those looking to speculate with options are in luck. The stock's Schaeffer's Volatility Index (SVI) of 52% stands in the 26th percentile of readings from the past year, indicating options traders are pricing in low volatility expectations. What's more, its  Schaeffer's Volatility Scorecard (SVS) tally sits at 98 out of 100, which points towards the equity's tendency to outperform volatility expectations. 

Elsewhere, short sellers are building their positions on X, adding 17% in the past two reporting periods. The 17.44 million shares sold short make up 7.5% of United States Steel stock's available float, or more than two days of pent-up buying power. It's also worth pointing out that all six covering analysts rate the shares a "hold" or worse, and a shift in sentiment could cause more tailwinds.

 

Published on Jan 23, 2023 at 11:08 AM
  • Analyst Update

The broader market is on the rise today, and a few stocks in particular are seeing tailwinds after bull notes. 

Barclays sees potential upside for Advanced Micro Devices Inc (NASDAQ:AMD), and upgraded the stock to "overweight" from "equal weight," with a price-target hike to $85 from $70. The firm upgraded several chip stocks, claiming the U.S. semiconductor sector just had its worst correction since the tech bubble of the late 1990's. Truist Securities threw in a bull note as well, raising its price target to $79 from $70. At last glance, Advanced Micro Devices stock was up 7.7% to trade at $75.48, and is currently up 15.9% year-to-date.

Shopify Inc (NYSE:SHOP) stock is up 6% at $42.92 at last check, after Deutsche Bank upgraded the SHOP to "buy" from "hold" and hiked its price target to $50 from $40. The firm sees more than 20% upside for the stock as more brands move to the platform. The equity is fresh off its fourth-straight week of gains, and is already up 23.8% since the start of 2023. Options bulls have been targeting the stock with a fervor amid the positive price action. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), SHOP's 10-day call/put volume ratio of 3.39 and its 50-day call/put volume ratio of 2.48 both rank in the 98th percentile of its annual range. 

Wayfair Inc (NYSE:W) stock is soaring to its highest level since August, up 24.3% at $58.17 at last look, after several bull notes. J.P. Morgan securities double-upgraded the shares to "overweight" from "underweight," with a price-target hike to $63 from $35, saying its time to buy the stock on the dip. Plus, Wedbush upgraded W to "outperform," and BofA Global Research hiked its rating to "buy." No fewer than four other analysts raised their price targets as well. 

Published on Jan 23, 2023 at 10:06 AM
  • Buzz Stocks
  • Earnings Preview
 

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