Market tumbled yesterday, with the S&P falling 2.8% while the Nasdaq plummeted nearly 4% in its worst session since September 2020. Asia markets closed mixed overnight while Europe stocks are higher this morning. U.S. futures are pointing higher, the Dollar and Yields are green while Oil and Gold are lower.
If you missed it, here is my rant from yesterday morning : https://www.optionmillionaires.com/jb-pre-market-rant-april-26th-2022/
And this is what UPB is reading this morning: https://www.optionmillionaires.com/morning-reads-12/
Markets setup yesterday the same way as Monday, melting lower into the noon hour. The difference between yesterday and Monday was that there was no magical hand to come in and stocks sold off for the rest of the day, led by big cap Tech... ie. TSLA. The narrative of a bear market is easy to conjure up here, as I have been saying for a while. If a parma-bear wanted to create a perfect backdrop for a sell-off, this would be it. The market is a great forward-looking mechanism. So if this selling continues, think that will imply inflation has not plateaued and Yields are not nearly done rising... ie. Mortgage rates going to 6-7%+. With that possible outcome on the horizon, think names that have enjoyed years of being able to use massive leverage due to their growth have a ways to go to the downside. I was mentioning DPZ in the chatroom yesterday. It is a $16 bil company with $5 bil in debt that they continue to refinance year after year... ie. kick the can down the road. They report tomorrow morning, so maybe one I get some speculative puts on.
Adding puts and holding thru the bounces is extremely tough. Monday was the perfect example. Anyone in puts would find it tough to hold thru the reversal(which only happened 56 other times in history). Then the market sells off again yesterday but the worry of another mid-day bounce and reversal may keep one out of the puts, only to see the market close near lows. It is also expensive to play with premiums so high that even if you do get the right directional move, your put may still lose money. I will be very selective on weakness to try and find any put hedges. If the SPY can't break and hold that $420 today, think the odds are high for a move to $410 and below to end the week:
GOOGL, MSFT, CMG, and others reported earnings after the close yesterday. GOOGL posted monster numbers but slightly missed estimates and the stock is lower in the pre-market. MSFT, on the other hand, posted a solid beat and raise and is up in the pre-market. Maybe MSFT can save the market today. Lastly, is CMG, which posted a decent Q though missed slightly on revenues. I think the surprising thing was margins, which weren't hurt as much as feared due to ingredient/Wage inflation. The stock is hanging up near $1500 in the pre-market. If that holds, I may look at some speculative calls for a move over $1600 into the end of the week. The difference between a name like CMG and DPZ is debt. CMG has no debt and $1.3 bil in cash:
IBM, BTAI, and CMG all closed lower but outperformed the indexes. SAM actually closed in the green, and I closed a few more of my calls for 100% to take more profits and will hold the last as long as it can hold that $350 handle:
ROKU is getting hit again in the pre-market on this news- 'Charter and Comcast Announce Joint Venture to Develop and Nationally Offer a Next Generation Streaming Platform'. Why they don't just go an acquire ROKU is beyond me. Either way, still interested in adding some calls ahead of ROKU's earnings tomorrow, just not going to catch a falling knife. Today could be the day it finds a bottom. If it can hold $86-87 will look at some speculative calls for some premium build for tomorrow with the hopes to be able to close some to cover costs by the bell:
EXAS is on watch this morning. It is getting some bullish commentary after falling yesterday after earnings. If it holds green could see $65+ in the coming days:
Here are the analyst changes of note for today:
|Alphabet price target lowered to $3,400 from $3,600 at JefferiesAlphabet
|Jefferies analyst Brent Thill lowered the firm's price target on Alphabet Class A to $3,400 from $3,600 and keeps a Buy rating on the shares following the company's Q1 report, stating that "FY22 is looking very different than FY21." Core Search and Cloud saw "healthy growth," but YouTube ad revenue missed the consensus forecast for the third straight quarter as it faced multiple headwinds that continue into Q2, Thill tells investors. He is lowering his FY22 estimates for gross and net revenue, operating margin and EPS following last night's report, Thill noted.
|Exact Sciences price target lowered to $81 from $100 at Craig-Hallum
|Craig-Hallum analyst Alex Nowak lowered the firm's price target on Exact Sciences to $81 from $100 due to depressed multiples across genomics and potential capital needs. The analyst keeps a Buy rating on the shares following quarterly results
|Enphase Energy price target lowered to $213 from $241 at Craig-Hallum
|Craig-Hallum analyst Eric Stine lowered the firm's price target on Enphase Energy to $213 from $241 to reflect broader multiple compression but continues to see it as a must-own, best-in-class name. The analyst keeps a Buy rating on the shares following quarterly results
|Goosehead Insurance price target lowered to $60 from $75 at Truist
|Truist analyst Mark Hughes lowered the firm's price target on Goosehead Insurance to $60 from $75 and keeps a Hold rating on the shares after its Q1 results. The challenges that the company has faced around corporate new business, as well as the slower conversion of franchises to operating status, persisted into this quarter, the analyst tells investors in a research note. Hughes adds that his new price target assumes a multiple of just over 8-times revenue, which is still "at the upper end of the InsurTech range"
|Visa price target lowered to $254 from $276 at Cowen
|Cowen analyst George Mihalos lowered the firm's price target on Visa to $254 from $276 and keeps an Outperform rating on the shares. The analyst said Q2results beat estimates across the board while key metrics accelerated in April after a robust F2Q. He said importantly, the company largely expects revenue growth to be in line with prior expectations despite the exit from Russia
|Diana Shipping reinstated with a Hold at Jefferies
|Jefferies analyst Christopher Robertson reinstated coverage of Diana Shipping with a Hold rating and $5 price target. Rates across several maritime group sub-sectors experienced normal seasonal pressures during Q1, but rates and asset values are now on the rise across several sub-sectors and the Jefferies shipping index is up about 25% year-to-date, largely due to recent equity performance in the dry bulk and tanker space, noted Robertson, who remains positive on supply-side fundamentals as he reinstate
d coverage of the maritime shipping group at the firm
And here is what I am watching today: CMG, ROKU, MSFT, GOOGL, FB, EXAS, ALGN, CAR, CUTR, and BURL. And MDB, TEAM, OKTA, ZS, and DDOG on weakness.
Let's have a great day!