August 1st, 2018 Watchlist

Good morning!  Futures are relatively flat pre-market on the heels of a record breaking move for $AAPL post earnings. 

UPB HERE - JB will be out for today

Todays Reads:

Yesterdays Option Recap:

Now on to today:

$AAPL is bearing $200 this morning - with prices set to hit never seen before levels, while getting closer to that $1 trillion valuation.

Today the FOMC meeting concludes and with it we'll get more dots and measured talk on the FED Funds rate.  From my perspective the risk is a more dovish tone, which would be bullish for equity prices.  We have a lot more earnings this week as well as a big Jobs report at the end of the week.

The Nasdaq held the 50 day earlier this week and bounced:

$IWM - small caps recovered that $165 level yesterday, and the long term trend remains higher:

The VIX still finds that 12 level to cold to break and has seen many of the recent equity declines begin with a test of the 12 level.  I think that 12 level will break this month sending equity prices higher.

and finally $TLT.   This morning bonds are selling off with $TLT under $119.  The set-up is there for a move lower, which implies higher rates.  This could help financials push for more upside.  I also still hold $119 puts and may go further out to capitilize on a possible move to $116 and then support at $112.

oh and yes,  $VSI hit a new multi-month high yesterday.  Earnings are one week away.  Love the chart.  Earnings hopefully will show continued improvement.  If so  $12 - $15 is possible and I will look out to 2019 calls to take advantage.


Some commentary and analyst action:

Treasuries Backtrack

  • U.S. Treasuries are on track for a lower open after the overnight session saw some selling in the futures market. Treasury futures spiked after Bloomberg reported that President Trump plans to increase tariffs on $200 billion worth of imports from China to 25.0% from 10.0% in hopes of pressuring Beijing into making concessions. However, the short-lived spike in futures was followed by a retreat. The Reserve Bank of India increased its repurchase rate by 25 basis points to 6.50% while the reverse repurchase rate was increased by 25 basis points to 6.25%. This was the second consecutive rate hike, matching expectations. The central bank's statement struck a mostly neutral tone, but RBI Governor Urjit Patel warned that "we are at the beginning of a currency war."
  • Yield Check:
    • 2-yr: +1 bp to 2.68%
    • 5-yr: +1 bp to 2.86%
    • 10-yr: +2 bps to 2.98%
    • 30-yr: +3 bps to 3.11%

Data out Today:

  • Weekly MBA Mortgage Index (actual -2.6%; prior -0.2%)
  • July ADP Employment Change ( consensus 175K; prior 177K) at 8:15 ET
  • June Construction Spending ( consensus 0.2%; prior 0.4%) and July ISM Index ( consensus 59.4; prior 60.2) at 10:00 ET
  • Weekly crude inventories (prior -6.2 mln) at 10:30 ET
  • August FOMC Rate Decision ( consensus -- no change; prior 1.75%-2.00%), July Auto Sales (prior 3.97 mln), and July Truck Sales (prior 9.61 mln) at 14:00 ET


Major European indices trade lower across the board with the UK's FTSE (-1.3%) showing relative weakness. It has been reported that French officials are the most critical of the UK's approach to Brexit. This comes at a time when French President Emmanuel Macron is dealing with a domestic scandal after one of his bodyguards donned riot gear and assaulted May Day protesters. Mr. Macron survived a no-confidence vote that took place today, but his popularity has declined to a fresh low of 39%, according to Journal du Dimanche.



Electronic Arts upgraded to Buy from Hold at Argus
Argus analyst Joseph Bonner upgraded Electronic Arts to Buy from Hold with a price target of $155, saying the latest pullback in the stock price after the company's recent Q1 earnings report offers a favorable entry point. Bonner states that while the videogame industry is dominated by the success of Fortnite, Electronic Arts will have a relatively stronger performance in the September and December quarters thanks to the expected launch of its new titles that includes Battlefield V.


$AAPL (one of many)

Apple price target raised to $225 from $210 at RBC Capital
RBC Capital analyst Amit Daryanani raised his price target on Apple to $225 and kept his Outperform rating after a "modest" Q2 earnings beat and better than expected Q3 outlook. The analyst sees "multiple" tailwinds stacking up for the company, including accelerating revenues of the Services segment, easing gross margins on lower NAND pricing, and a "robust" performance in China in spite of the trade war concerns. Daryanani adds that the investment narrative is shifting toward Apple's ability to sustain mid-single digit sales growth rate in spite of the flat iPhone shipment volume, along with EPS growth driven by the company's buybacks


RBC Capital analyst Mark Mahaney upgraded Pandora to Outperform from Sector Perform and raised his price target to $10 from $6. The analyst notes the company's double-digit organic revenue growth and declining EBITDA losses were driven by improving execution, adding that while the 2% active listener hours decline is a worry, the valuation on the stock is "undemanding" given its expected annualized revenue growth of about 10% over the next 3 year


Shopify price target lowered to $145 from $155 at Barclays
Barclays analyst Deepak Mathivanan lowered his price target for Shopify to $145 following the company's Q2 results. Gross merchandise volume growth in the quarter decelerated by eight points to up 56%, Mathivanan tells investors in a post-earnings research note titled "Two Out Of Three On Key Metrics." Despite the post-earnings selloff, the stock's valuation is still at a significant premium to peer group, the analyst adds. He keeps an Equal Weight rating on Shopify


Papa John's upgraded to Buy from Hold at Jefferies
Jefferies analyst Alexander Slagle upgraded Papa John's International to Buy and raised his price target for the shares to $58 from $52. The stock, down 50% from highs, now reflects the likelihood that fundamentals will get worse before improving, Slagle tells investors in a research note. After reviewing the company's potential path to recovery and possible strategic actions that could create shareholder value, the analyst has a bull case of $75 per share. He thinks this outweighs the bear case, or downside risk, of $35 per share. Papa John's closed yesterday down 10c to $41.96


Ultimate Software price target raised to $330 from $280 at Roth Capital
Roth Capital analyst Richard Baldry raised his price target for Ultimate Software to $330 from $280, citing its "strong" Q2 results under new CFO Felicia Alvaro, which continues the "unusual" upside performance patterns of the prior three quarters. The analyst reiterates a Buy rating on the shares


AutoZone upgraded to Buy from Hold at Deutsche Bank
Deutsche Bank analyst Michael Baker upgraded AutoZone to Buy and raised his price target for the shares to $805 from $675

Analyst comments:

  • GDS +6.2% (upgraded to Outperform from Neutral at Credit Suisse)
  • FATE +4.6% (ticking higher; initiated with a Buy at Citigroup; tgt $20)
  • DBX +2.7% (upgraded to Buy from Hold at Jefferies)
  • PZZA +2.5% (upgraded to Buy from Hold at Jefferies)
  • EA +1% (upgraded to Buy from Hold at Argus)
  • FSLR +0.7% (added to Analyst Focus List at JP Morgan)
  • AFL +0.5% (upgraded to Buy from Hold at Sandler O'Neill)

Watching Today:

$GOOGL with some big news out this morning entering China.  I am looking for some weekly calls as I think this could help propel the stock to possible new record highs.

$SHOP once the dust settles from the last few sessions of carnage, I think the stock will move higher.  Depending on how the premiums have decayed today I may get those $145 calls for this week.

$JPM, $WFC, $C, $GS or $XLF -  yesterdays rally for bonds, while short lived, took down the financials with names like $JPM falling over 1.5% by yesteday afternoon.  With $TLT down almost $1 today, and the FED on tap later today, I think the banks could catch a bid into weeks end.

Have a great day!

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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