Shares of Dick's Sporting Goods Inc (NYSE:DKS) and Best Buy Inc (NYSE:BBY) are in focus today, after both retail giants reported third quarter results.

After opening at $227.67, Dick's Sporting Goods stock was last seen 0.1% higher at $216.00, after the sporting goods retailer posted better-than-expected earnings and revenue for the quarter, as well as a strong outlook for the holiday shopping season. The firm raised its full-year guidance, and anticipates fiscal 2024 same-store sales growth of between 3.6% and 4.2% -- higher than its previous range. Year to date, DKS is still 50.4% higher.

Best Buy stock is 8.9% lower to trade at $84.79 at last glance, after the company reported third-quarter results that were below estimates, and slashed its full-year sales forecast. The consumer electronics retailer said that new iPhones and laptops with artificial intelligence (AI) capabilities couldn't drive sales higher. Since the start of 2024, BBY is up 9%

Options traders are blasting both equities after the results. Already, DKS has seen 12 times the intraday average volume, while BBY has seen 8 times the volume typically seen at this point in trading.

Schaeffer's Weekend Trader subscribers scored a big win just in time for Thanksgiving. Bulls doubled their money with our Hims & Hers Health Inc (NYSE:HIMS) February 17 call recommendation in just over one week, so now is a good time to see how the trade played out. 

At the time of our recommendation on Nov. 17, HIMS had just nabbed an all-time high after a push above $30, which was three times its 2019 initial public offering (IPO) price. A sharp pullback followed that peak, which may have been exaggerated by an unwinding of long positions associated with expiring November call open interest (OI), in addition to as delta-hedge selling related to heavy out-of-the-money OI in 11/22 through standard December expiration.

There was plenty of support lingering below to capture that downturn, which made it a good time to bet on a rebound for HIMS. The $19-$20 level was also home to the last put-heavy strikes, the 50-day moving average, and a trendline connecting higher lows since September.

What's more, shares were above the 61.8% Fibonacci retracement level connecting their September lows and recent highs, as well as $17.90, which was double their 2023 close. Short interest had nearly tripled since March, and shorts were likely to use that pullback to cover. 

As anticipated, shares bounced off the $18 level and 50-day trendline the day after our recommendation, and have been in rally mode since. HIMS was last seen up 19.7% to trade at $30.32 at last glance, pacing for its fifth win in the last six sessions, enabling our traders to collect a 100% gain.

It's both 'Black Friday' and earnings week for Abercrombie & Fitch (NYSE:ANF). The apparel retailer will announce its latest quarterly report before the open tomorrow, Nov. 26, and the shares are on the rise ahead of the event. 

ANF was last seen up 3.7% at $157.62, extending last session's 7.4% pop as it heads for a third-straight gain. The stock is trading at its highest levels since mid October, and just broke above recent pressure at the 100-day moving average on Friday. Year to date, the equity is up 79.2%. 

The stock has a history of outsized post-earnings moves, averaging a 15.5% swing over the past two years, regardless of direction. Only three of these past eight moves were negative, though that includes a 17% drop this past August. This time around, the options pits are anticipating a 17.9% next-day swing. 

Call traders have been targeting ANF ahead of the event. The stock's 10-day call/put volume ratio of 2.54 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks higher than 92% of readings from the past year. 

The end of the year, a typically bullish period for the S&P 500 Index (SPX), is quickly approaching. And with President-elect Donald Trump making his cabinet picks, this is shaping up to be an interesting start to the new year. With this in mind, we're taking a look at electric vehicles (EV), a sector that's being closely monitored given Trump's plans for harsh tariffs on China and his close ties with Tesla (TSLA) CEO Elon Musk.

Rivian Automotive Inc (NASDAQ:RIVN) is making big moves today, last seen 13.9% higher to trade at $11.66. Coincidentally, the equity is receiving a lift following a settlement with Tesla. The latter said it reached a "conditional" settlement in regards to a 2020 lawsuit that accused Rivian of poaching employees and theft of EV trade secrets. Despite today's pop, RIVN remains nearly 50% lower year to date.

Shares of EV fast charging network company Evgo Inc (NASDAQ:EVGO) are also performing well today, trading 3.4% higher at $6.58 at last glance. Shares have tumbled in recent weeks, down 14.5% in November as traders grapple with the potential implications of Trump's proposed policies. However, EVGO remains 11.3% higher over the last 12 months, with an 87.7% year-to-date gain to boot.

U.S.-listed shares of China-based EV maker Nio Inc -- ADR (NYSE:NIO) are trading lower this afternoon, following a bear note at Goldman Sachs. The analyst downgraded NIO to "sell" from "neutral" and cut its price target to $3.90, citing a myriad of issues including a tough path to profitability. Last seen 2.8% lower at $4.71, Nio stock now sports a 48.2% year-to-date deficit. 

Software stock Quantum Computing Inc (NASDAQ:QUBT) is soaring, up 20.8% at $7.37 at last glance, after a boost from Amazon.com (AMZN). Amazon Web Services (AWS) launched the Quantum Embark Program today, helping users solve problems using quantum mechanics. 

Today's pop has the stock jumping to its highest levels since Nov. 2021. On track for its fifth-straight gain, QUBT is further removing itself from penny stock territory after breaking past $5 last week. Since last Monday, the equity is up roughly 144%. 

The busy options pits are leaning bullish after the event. So far, 18,000 calls and 5,256 puts have been exchanged, which is seven times the overall options volume typically seen at this point. The weekly 11/29 10-strike call is the most popular, followed by the 7.50-strike call in the same series, with new positions opening at the former. 

Short interest is up a whopping 47.3% over the past two weeks, and now represents 6% of the stock's available float. An unwinding of these bearish bets amid the stock's outperformance could add fuel to the fire. 

Bath & Body Works Inc (NYSE:BBWI) stock is up 17.7% to trade at $36.14 at last glance -- their highest level since July -- after the retailer announced better-than-expected earnings and revenue for the third quarter. The company also raised its full-year forecast amid strong demand for its candles and fragrances during the holiday season.

Shares are on track for their biggest single-day percentage gain on record, their third daily win in the past four sessions, and first close above the 40-day moving average since early June. Over the past year, the security added 22.5%.

The brokerage bunch is split toward BBWI, with nine firms calling it a tepid "hold" or worse, while nine say "buy" or better. This means Bath & Body Works stock could still benefit from a round of upgrades. 

Options traders are already chiming in on the results, with 9,553 calls and 2,275 puts traded so far, which is 11 times the volume typically seen at this point. The most active contracts are the weekly 12/6 35- and 36-strike calls, where new positions are currently being bought to open.

Target Corp (NYSE:TGT) stock is 1.6% higher before the bell, on track to open at $126.99 after being named a "top pick" at Oppenheimer. In its bull note, the analyst praised the retailers improved risk-to-reward profile and called TGT's dividend yield "attractive."

Target stock boasts an intriguing entry point, considering its 12.2% year-to-date deficit. The equity's losses began to pile up last week, after the firm recorded its largest earnings miss in two years and slashed its full-year guidance. In fact, shares shed 17.8% last week for their fifth weekly loss in six, and now sit at their lowest level since November 2023.

Given its lackluster technical setup, it should come as no surprise that 15 of 33 covering brokerages rate the stock a "hold" or worse. However, positive price action could force these analysts to change their tune, which in turn could provide tailwinds for the struggling retail name.

For those looking to speculate, premium is affordable at the moment. This is per Target stock's Schaeffer's Volatility Index (SVI) reading of 24%, which sits higher than 14% of reading from the last 12 months. This implies that options traders are pricing in relatively low volatility expectations. 

“Last week’s sharp rally occurred in the context of not only positive seasonality, but the bullish ‘head & shoulder’ breakout pattern from mid-September…The target for the S&P 500 Index …based on the technical pattern, is … 6,215…The 6,215 target is just that, with no details on the exact path it will take if the target is achieved, nor whether it undershoots or overshoots…the first potential support level is last month’s high at 5,880.”

- Monday Morning Outlook, Nov. 11, 2024

“…the SPX has experienced a second ‘island reversal’ in the past two weeks. First a bullish reversal, and now a bearish reversal. In the shorter term, this signals the potential for bearish follow-through price action in the coming days. Plus, Friday’s closing candle held the 20-day moving average, which aligns with October highs.”

- Monday Morning Outlook, Nov. 18, 2024

The excerpts above are intended to give you a glimpse into the major S&P 500 Index (SPX -- 5,969.34) technical underpinnings we are observing as we near Thanksgiving and the final month of 2024. First and foremost, the bullish inverse “head and shoulder” breakout from September remains “in play,” with a targeted move to 6,215 by year end.

But as cautioned, there is nothing about the path the index will take if, in fact, this target is achieved. For example, a bearish island reversal occurred two weeks ago, threatening to undercut the bullish tendencies of the inverse “head and shoulder” breakout from mid-September.

In mid-October, prior to that development, the SPX experienced a near bearish “outside day” candle that predicted a pullback to the 50-day moving average (as loyal readers of this commentary know, bearish “outside day” candles have led to multiple pullbacks throughout 2024).

But the Nov. 15 candle that produced the bearish “island reversal” marked the low, as support from the October high at 5,880 worked with the SPX’s upward-sloping 20-day moving average before the Nov. 15 gap lower was filled last week, indicating the bulls remain in control.

With bulls seemingly in control, there is work to be done on the rally from short-term support. The mid-November closing and intraday high in the vicinity of 6,000-6,008 is overhead. Plus, as Schaeffer's Senior Market Analyst Matthew Timpane discussed last week, not only is the 6,000 a key round psychological millennium level for the SPX, it is also a major 161.8% Fibonacci extension of the July peak and August low.

In fact, per the table below, many U.S. equity benchmarks are battling potential round-number resistance. Plus, Bitcoin (BTC) and the CBOE Market Volatility Index (VIX -- 15.24) are trading in the vicinity of round numbers, with 15 being considered round-number support for the latter.

The importance of the 15 level for the VIX in 2024 is seen in the chart below. It acted as resistance in late May ahead of a huge rally in the SPX. In addition, the July, August and September bounces from 15 signaled short-term trouble ahead for the SPX. This means bulls would like to see a sustained move below the VIX 15 level, longer than that which occurred earlier this month.

Options bulls face a couple of risks in the short term as multiple indexes test round, psychological levels. First, the VIX is nearing a level those seeking portfolio insurance might find attractive if using SPX put options, with the implication that increased hedging activity among those perceiving options to be cheap could create a headwind.

Plus, a measure of short-term traders' moods is moving higher again from an extreme low (lows indicate optimism among speculative option buyers, who are usually wrong at key turning points). The behavior of the SPX's 10-day, buy-to-open put/call volume ratio looks like that of last month, which preceded a short-term pullback to the SPX’s 50-day moving average. This could imply another decline to a support level that wrings out an excess of optimism among short-term equity option buyers.

As of now, these are risks that you should have on your radar in the days ahead. In the absence of the SPX breaking below a support area, the risks take on less meaning, but this could change quickly.

I expect that any pullbacks will be shallow, since there is a large short position on the SPX that has been prevalent this year, as many thought the narrow-based rally would give way to overall market weakness. However, a broadening number of stocks is now participating in this rally and shorts may look to cover losing positions, if given what is perceived to be an opportunity on a pullback.

Todd Salamone is the V.P. of Research at Schaeffer's Investment Research.

Continue Reading:

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