Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Jul 31, 2020 at 1:47 PM
  • Editor's Pick
  • Intraday Option Activity
  • Buzz Stocks
This post-earnings rally has attracted plenty of attention in the options pits, as options volume is currently running at 11 times its usual rate. So far, 163,000 calls and 60,000 puts have crossed the tape, the most popular being the November 25 call, followed by the August 40 call -- where new positions are being opened.
Published on Jul 31, 2020 at 1:30 PM
Updated on Jul 31, 2020 at 1:35 PM
  • 5-Minute Market Rundown

More earnings data, the next round of coronavirus stimulus, and the Fed's interest rate decision highlighted the last week of July. All major benchmarks started the week in the black, boosted by Big Tech and various quarterly beats on Monday. Investor sentiment was not as optimistic on Tuesday, after Senate majority leader Mitch McConnell unveiled the Senate's proposed HEALS Act, kicking off unsuccessful negotiations on additional COVID-19 relief. 

Mid week, the Federal Reserve fulfilled the expectation that federal interest rates would remain unchanged, near zero. Meanwhile, investors tuned in to testimonies from top chief executives in technology, as they answered to a year-long anti-practice probe. Towards the end of the week, the country's gross domestic product (GDP) showed a record drop, while jobless claims rose for a second week. The lack of progress in a second stimulus package also weighed on the market, as did U.S. President Donald Trump's suggestion to delay the presidential election. By Friday morning, earnings from several FAANG names and other tech giants weren't enough to ease tensions over the relief gridlock, with lingering COVID-19 anxieties sending the Dow toward a weekly loss. The S&P 500 and the Nasdaq though, were on their way to weekly wins.

A Busy Week for Technology Stocks

The technology sector was front and center over the past week. Universal Display (OLED) rose after it earned an upgrade to "outperform" from "market perform" from Oppenheimer, which was attributed to the semiconductor stock's ability to beat expectations. That same day, Zoom Communications (ZM) was also higher, with shares pulling back to a historical area of support that could soon serve as additional tailwinds. By Tuesday, Intel (INTC) was down, after it announced its chief engineering officer would be stepping down on August 3. And on Thursday, Qualcomm (QCOM) was considerably higher following the company's fiscal third-quarter beat, which helped the security walk away with no fewer than 12 price-target hikes.

Lastly on Friday, Alphabet (GOOGL) also earned its fair share of price-target hikes, after it reported second-quarter profits and revenue that were higher than expected. Meanwhile, Apple (AAPL) surged even higher, entering the earnings confessional to beat revenue and earnings estimates, with gains in every product category as consumers and students move to remote work and learning.

Food Stocks Struggle to Shake Off Pessimism

It was a mostly dismal week for food stocks. On Monday, McDonald's (MCD) moved lower after it reported earnings that were lower than Wall Street's estimates, marking the fast food chain's second quarterly miss in the last 12 months. Meanwhile, Starbucks (SBUX) was higher  after the coffee giant reported a smaller-than-expected third-quarter loss, as stores reopen around the world. Meanwhile, Kraft Heinz (KHC) was sinking after the company took a writedown charge on several businesses worth $3 billion. On Thursday, Yum! Brands (YUM) was also sliding, despite an encouraging second-quarter earnings thanks to increased demand during the pandemic. 

More Earnings, Jobless Claims Define Upcoming Week

The first week of August will be even busier in terms of earnings reports, with high-profile names like Square (SQ), Uber (UBER), Roku (ROKU), and Walt Disney (DIS) lined up to enter the earnings confessional. As for economic data, all eyes will be on what has become an important indicator of how the pandemic has progressed -- initial and continuous jobless claims. Until then, you can prepare for the next time the S&P 500 loses steam, and find out which index levels to watch closely amid historic optimism. 

Published on Jul 31, 2020 at 12:15 PM
Updated on Jul 31, 2020 at 12:23 PM
  • Midday Market Check

Stellar quarterly earnings from major tech companies like Amazon (AMZN), Apple (AAPL), and Facebook (FB) are propping up the tech-heavy Nasdaq Composite (IXIC), but the other major indexes aren't faring so well. The Dow Jones Industrial Average (DJI) and S&P 500 Index (SPX) both erased their earlier gains, with the former down over 180 points midday. An earnings miss from blue-chip name Chevron (CVX) is dragging down the Dow. Meanwhile, indecision surrounding the coronavirus relief bill, just as unemployment benefits are set to expire, is undoubtedly making Wall Street nervous.  

Oil prices are relatively unchanged today, though the commodity is on track for a monthly win on the back of the softening U.S. dollar. At last check, crude for August delivery is down 0.1% at $39.86 per barrel, while gold is on its way for its biggest monthly gain in eight years, up 2.1% at $1,983.50 per ounce at last check. 

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

  • AAPL is booming after an upbeat earnings report and stock split announcement.
  • Meanwhile, Alphabet stock is slipping after posting its first ever drop in revenue.
  • Plus, SRNE calls are a big hit; Pinterest stock is surging; and Eastman Kodak stock is falling on the charts.

Midday Market Stats July 31

One stock seeing notable activity in its options pits is Sorrento Therapeutics Inc. (NASDAQ:SRNE). Over 33,000 calls have exchanged hands, which is five times the intraday average with volume pacing in the 99th percentile of of its annual range. This is compared to just 3,264 puts. The two most popular are the August 10 and 15 calls. The equity was last seen up 17.7% at $10.06, and just hit a two-year high of $10.54 earlier today. 

Pinterest Inc (NYSE:PINS) is one of the best performers on the New York Stock Exchange (NYSE) today, last seen up 31.5% at $33.06. Today's surge comes after PINS bested analysts' second-quarter quarter expectations. The social media name boasts an impressive 74.1% year-to-date lead, and just toppled its 20-day moving average after briefly dipping below the trendline. 

PINS Chart July 31

Meanwhile, one of the bottom performers on the NYSE today is Eastman Kodak Company (NYSE:KODK), last seen down 24.1% at $22.64, just a few days after it was reported the company secured a $765 million loan from the U.S. government to speed up development of Kodak Pharmaceuticals, causing the stock to surge 318.1% in one day. While investors are undoubtedly taking profits on that one-day jump, the security is still trading well above former pressure at is 320-day moving average, and boasts a year-to-date gain of 369.8%. 

Published on Jul 31, 2020 at 11:30 AM
  • Technical Analysis
  • Expectational Analysis
  • Editor's Pick

Schaeffer's Volatility Scorecard (SVS) is a lagging indicator that measures a stock's realized volatility against the volatility expectations priced into that stock's options over the past year. The goal is to find which stocks have been the best -- and worst -- for premium buyers. The SVS is a very useful tool for premium sellers too, as “the worst” for a premium buyer can be construed as “the best” for a premium seller.

Using our robust historical database, we conduct extensive research on each underlying equity and determined which of those underlying equities’ options have historically had underpriced or overpriced options. We rank each equity’s options relative to the others in our universe, with scores ranging from zero to 100. For more information on how to use these scores, please review instructions following the scorecard.

Below is deeper dive into three stocks that showed up on our comprised list; payments processing specialist Square Inc (NYSE:SQ), clean energy stock Enphase Energy Inc (NASDAQ:ENPH), and food delivery service GrubHub Inc (NYSE:GRUB).

What's the uniting thread between these three unique stocks? Right now SQ, ENPH, and GRUB all boast SVS' of 98, 100, and 96, respectively. In simpler terms, all three stocks have tended to exceed option traders' volatility expectations during the past year, a good thing for option buyers.

At last check, SQ was up 3.4% to trade at $127.75, a chip-shot from its July 9 record high of $133.81. The shares have almost quadrupled off their March 18 lows of $32.33, and have more than doubled year-to-date. During this channel of higher highs, the ascending equity's 20-day moving average has stepped as admirable support

Daily Stock Chart SQ

A short squeeze could be fueling the gains. Short interest fell off by 13.8% in the two most recent reporting period, yet still accounts for a healthy 8.2% of SQ's total available float. The security could also benefit from a shift in analyst sentiment, as 22 of the 35 in coverage still rate it a "hold" or worse.

Switching over to ENPH, the California-based solar energy name was last seen up 3.6% at $59.32. Like Square, Enphase stock has also more than doubled in 2020, but remain a ways off their May 19 record high of $70.36.

Daily Stock Chart ENPH

Enphase shorts have been headed for the exits, down 5.7% in the two most recent reporting periods. Yet that 11.63 million shares sold short still takes up 10.1% of ENPH's total available float, so a continued exodus of bearish bets could keep the wind at the equity's back.

And lastly there's GrubHub stock, which at last check was up 1.4% at $71.06. GRUB is up 109% in the last nine months, with its 30-day moving average containing the last month's consolidation on the charts. 

Daily Stock Chart GRUB

Now looks like a good time to get in on GrubHub with options, too. Despite its July 30 earnings report, GRUB's Schaeffer's Volatility Index (SVI) of 50% ranks in the 10th percentile of its annual range. This suggests options players have been pricing in relatively low volatility expectations of late. 

This article is an updated column that originally appeared on Stocknews.com.

Published on Jul 31, 2020 at 10:44 AM
  • Buzz Stocks
  • Analyst Update

Online sports and gambling concern DraftKings Inc (NASDAQ:DKNG) is up 2.2% at $35.55 after Benchmark initiated coverage with a "buy" rating and a $47 price target -- representing a 35% premium to last night's close. The analyst cited DraftKings' leading brand and market share in the fantasy sports space, and predicted a "potentially massive" and growing addressable market from online sports betting and iGaming state legalization. 

Benchmark is in good company. Coming into today, all nine analysts in coverage considered DraftKings a "buy" or better. Plus, the consensus 12-month price target of  $46.70 is a 32.6% premium to current levels, and marks a level not yet touched by DKNG. 

The options pits are reflecting this sentiment. In the last 10 days, 91,124 calls crossed the tape, compared to just 25,879 puts. Plus, DKNG's Schaeffer's put/call open interest ratio (SOIR) of 0.11 suggests short-term options traders are targeting calls over puts of late. 

This optimism is unsurprising. DKNG has had an impressive run on the charts since going public back in April. While a ceiling at the $44 level sent the security lower in late June, its 80-day moving average swooped in as a springboard -- sending DraftKings stock to a year-to-date lead of 227.3%. The stock is also enjoying support at its 60-day moving average. 

 

 

Published on Jul 31, 2020 at 10:40 AM
  • Intraday Option Activity
  • Buzz Stocks
 
Published on Jul 31, 2020 at 10:26 AM
  • Analyst Update
  • Intraday Option Activity
  • Buzz Stocks
Today, options traders are taking a greater-than-usual interest in Big Tech staple Apple Inc. (NASDAQ:AAPL).Options are trading at five times average intraday amount -- volume which is pacing in the top percentile of annual readings -- with new positions being opened at the weekly 7/31 410-strike call.
Published on Jul 31, 2020 at 10:06 AM
  • Intraday Option Activity
  • Buzz Stocks
  • Analyst Update
 Today though, the appetite has shifted more to calls. In just the first hour of trading, over 6,000 calls have changed hands -- eight times the average intraday amount and double the number of puts traded. 
Published on Jul 31, 2020 at 9:26 AM
Updated on Jul 31, 2020 at 9:36 AM
  • Opening View

Futures on the Dow Jones Industrial Average (DJI) are pointing to modest gains this morning, while futures on the tech-rich Nasdaq-100 Index (NDX) are eyeing a sizable move above fair value. This comes after several major tech names -- including Amazon (AMZN), Alphabet (GOOGL), Apple (AAPL), and Facebook (FB) -- reported blowout earnings results for their most recent quarters, putting their expected market cap at more than $5 trillion combined.

However, a lackluster earnings report from oil giant Chevron (CVX), gridlock over the next emergency stimulus plan, and lingering COVID-19 anxieties are keeping a lid on Wall Street's gains this morning.

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

  • This food processing stock couldn't capitalize on an earnings beat.
  • Options bulls pile on chip stock post-earnings.
  • Plus, Caterpillar and Chevron step into earnings confessional; and bull notes galore for Apple after a four-for-one stock split. 

futures chaart july 31

5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw 1.4 million call contracts traded on Thursday, and 777,171 put contracts. The single-session equity put/call ratio rose to 0.55, and the 21-day moving average stayed at 0.47.
  2. Caterpillar Inc. (NYSE:CAT) is inching higher this morning, last seen up 0.4% after posting second-quarter earnings and revenue that exceeded analysts' estimates. The blue-chip company did report a year-over-year sales drop sparked by lack of demand. Caterpillar stock is up 17.4% in the last three months.
  3. Oil giant Chevron Corporation (NYSE:CVX) reported second-quarter losses of $1.59 per share, which came in much wider than the 92 cent loss expected by analysts. Revenue also missed the mark, mostly due to the alarming drop in oil and gas prices amid COVID-19. The stock is down 3.3% ahead of the bell, set to add to its 28.4% haircut in 2020. 
  4. In addition to a fiscal third-quarter earnings and revenue beat, Apple Inc. (NASDAQ:AAPL) also announced a for-for-one stock split. These means that investors will have a chance to purchase Apple stock for around $100, depending its perch at the end of August. The equity is up 7% in electronic trading, and has received 14 price-target hikes from analysts this morning, the highest coming from Wedbush to $475 from $450. 
  5. The employment cost index, the Markit manufacturing purchasing managers index (PMI), data on personal spending, new home sales, and the  University of Michigan's consumer sentiment index are lined up today, while Chevron (CVX) and Caterpillar (CAT) join the earnings party.

OV Buzz Chart July 31

Economic Data Moves Asian Markets; European Stocks Struggle Despite Tech Boost

Stocks in Asia were mixed to close out the week, after news came out that the United States’ growth domestic product (GDP) shed 32.9% in the second quarter – the worst drop in history. As a result, Japan’s Nikkei fell 2.8%, leading losses among the region’s major markets. Meanwhile, South Korea’s Kospi and Hong Kong’s Hang Seng closed 0.8% and 0.5% lower, respectively. Elsewhere, China’s Shanghai Composite rose 0.7%, boosted by manufacturing data that exceeded expectations.

Across the pond, stocks are higher, after blowout earnings reports from the technology sector lifted investor sentiment. Nonetheless, many are still monitoring the region’s GDP, with both France and Germany reporting sharp drops. At last check, the German DAX was up 0.7%, France’s CAC 40 was up 0.2%, and London’s FTSE 100 was down 0.2%.

Published on Jul 30, 2020 at 2:32 PM
Updated on Jul 30, 2020 at 4:36 PM
  • Intraday Option Activity
  • Buzz Stocks
Kraft Heinz (KHC) reported second-quarter earnings and revenue coming in above Wall Street's forecasts, but the stock is sinking after a multi-billion dollar writedown charge
Published on Jul 30, 2020 at 4:29 PM
  • Market Recap

The Dow closed the day 225 points lower, after gross domestic product (GDP) showed a record drop while jobless claims rose for a second week. The S&P 500 also ended in the red, while the Nasdaq managed to rise as investors await earnings out of several FAANG names and other tech giants. Elsewhere, the lack of progress in a second stimulus package weighed on the market, as well as U.S. President Donald Trump suggesting a delay of the presidential election. 

  • Mobile gaming stock could hit double-digits. 
  • Bulls move in on broadcasting giant
  • Plus, fast-food stock slid with sales; semiconductor stock soared to new highs; and UPS lands a surge in options volume. 

The Dow Jones Industrial Average (DJI - 26,313.65) dropped 225.9 points, or 0.9% for the day. Procter & Gamble (PG) rose to the top of the Dow, finishing 2.4% higher, while Exxon Mobil (XOM) fell to the bottom, losing 4.9%.

Meanwhile, the S&P 500 Index (SPX - 3,246.22) fell 12.2 points, or 0.4% for the day, and the Nasdaq Composite (IXIC - 10,587.81) rose 44.9 points, or 0.4% for today's session.

The Cboe Volatility Index (VIX - 24.76) added 0.6 point, or 2.7%, for the day.

Closing Indexes Summary July 30

NYSE and Nasdaq Stats July 30

  1. Food and Drug Administration (FDA) Commissioner Dr. Stephen Hahn says that a quick coronavirus vaccine that is 100% effective is unrealistic. He goes on to reveal the minimum requirements.  (CNBC)
  2. While it's no secret that the oil sector has been hit hard by the global pandemic, there were still two winners amid the otherwise bleak crude earnings.(Marketwatch)
  3. Fast-food name dips despite positive quarterly report. 
  4. Analysts chime in on this semiconductor stock after earnings.  
  5. Earnings beat delivers record highs for UPS. 

Corporate Earnings July 30

Unusual Options Activity July 30

Data courtesy of Trade-Alert

Gold, Oil Retreat From Recent Gains

Oil futures ended below $40 a barrel for the first time in three weeks, as worries about energy demand increased. September-dated crude fell $1.35, or 3.3%, to settle at $39.92 a barrel. 

Gold futures fell today for the first time in 10 sessions, following a rally of record highs and a retreat from bullion. Gold for August fell $11.10, or 0.6%, to settle at $1,942.30 an ounce. 

Published on Jul 30, 2020 at 3:56 PM
  • The Week Ahead

If last week's swarm of blue-chip reports seemed like overkill, just wait until the first week of August. It may not feature heavy tech hitters or Dow names, but earnings season will hit high gear to start the new month. And in terms of economic data, there's the much-anticipated unemployment at the end of the week, as well as what's turned into an important indicator of late amid the coronavirus -- initial and continuous jobless claims. The newly reopened blue-chip giant Walt Disney (DIS) will report earnings on Tuesday. 

Below is a brief list of some key market events and a few high-profile earnings releases scheduled for the upcoming week. All earnings and economic dates listed below are tentative and subject to change. Please check with each company's respective website for official reporting dates.

Monday, August 3, will start the week out with the Markit manufacturing purchasing managers index (PMI) and the ISM manufacturing index. Meanwhile, Clorox (CLX), Tyson Foods (TSN), and Virgin Galactic (SPCE) will step into the earnings confessional. 

Tuesday, August 4, will bring factory orders, as well as earnings from Activision Blizzard (ATVI), Enphase Energy (ENPH), Gluu Mobile (GLUU), Match Group (MTCH), Twilio (TWLO), DIS. 

July's ADP Employment report and trade deficit data are on the schedule for  Wednesday, August 5. Also moving markets will be Markit services PMI and ISM non-manufacturing PMI. CVS Health (CVS), Moderna (MRNA), Peloton (PTON), Teva Pharmaceuticals (TEVA), Roku (ROKU), Square (SQ), Wayfair (W), Wendy's (WEN), Western Digital (WDC), and Zynga (ZNGA) will all throw their hats into the earnings ring.

On Thursday, August 6, investors will keep an eye on weekly jobless claims data, while earnings from Cloudflare (NET), Dropbox (DBX), First Solar (FSLR), GoPro (GPRO), Fortinet (FTNT), Papa John's (PZZA), T-Mobile (TMUS), Uber (UBER), and Yelp (YELP) are on tap. 

The data lined up for Friday, August 7 includes nonfarm payrolls, unemployment rate, and consumer credit. Canadian Solar (CSIQ) will round out the week's earnings frenzy.


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