Markets fell for the 4th session in a row on Monday, with the S&P dropping .90% on no true catalyst. Asia markets closed lower overnight while Europe indexes are mixed this morning. U.S. futures are pointing to a red open as I write this, the Dollar is also lower while Yields, Oil, and Gold are higher.
It was a rough start to the week, with stocks failing to find a bid for most of the day, hitting lows at the 3 O'clock hour, before finding buyers in the last 30 minutes to close off the lows. Some are attributing the recent action to tax loss selling and could exacerbated some downside moves. Take AMZN for example, which closed at multi-year lows yesterday:
Overnight Japan surprised with a hawkish/unexpected move on their 10yr bonds, removing a cap. Pressuring futures. Have to think at some point folks will step in and buy some of these beaten up names into next year - which is why we typically get some type of Santa rally. The SPY is now solidly under the 50dma. Would want to see some type of support today and think that area will be revisted again in the next day or two. If buyers don't come in, that $365 level looks to be the next test:
I added some VKTX calls at the open. As I mentioned on yesterdays watchlist, MDGL posted some phenomenal phase 3 data for their NASH drug. VKTX uses the same 'mechanism' in their NASH study so would seem likely that they will also post some favorable data in the first half of 2023. I may actually look at some leap calls today(likely May strikes) for a move to $15+. I was able to add some January calls and close some out for 100% and 200%. Will hold the rest for now as I think this can trade to $8+ in the coming days:
AYX finally joined in the market sell-off, closing off over 3%. Still think this is $55+ in the coming weeks so will continue to hold my calls:
BLK held up relatively well yesterday. It now has a tight Bollinger-band setup which typically precedes huge moves. Of course I am biased to the upside. Still eyeing some calls here:
It was a rough session for ULTA yesterday, closing off over 2%. At some point this will rally 10%+ over a few sessions. If it shows strength at all today will look for some calls to play for that move:
The WSJ is out this morning with a negative spin on NFLX's ad supported launch, while at the same time, Oppenheimer is out reiterating their bullish stance with a $365 PT. Could be an opportunity to try some calls again so will be watching today. If it can reverse the mornings gap lower and break over $283, would look for some strikes to play for a move above $295 this week:
Still eyeing SQ and RARE as well. And as I continue to mention, I am more open to playing calls for bounces then trying to play for downside, especially now with the market off 4 days in a row.
Here are the analyst changes of note for today:
Oppenheimer reiterates bullish stance on Netflix's ad tier driving sub growth |
| Oppenheimer analyst Jason Helfstein reiterates an Outperform rating and $365 target on Netflix (NFLX) in response to Digiday's article indicating execution struggles with the new advertising tier. The analyst believes Netflix's stock will be driven by subs, not revenue, and data on viewership are indicative of in-line or better subs. He is less concerned for four reasons, namely because still early in launch and not flooding number of ads; if true, $55 CPM is a bullish starting rate; advertisers want to move unspent funds to Q1; Microsoft (MSFT) likely has minimum guarantees, so it's unlikely that Netflix will miss ad revenue in short-term. Netflix Top Ten data also indicate more hit releases as of Dec. 11 versus Q3 2022, Helfstein notes, adding that 3P data show Netflix churn remains well below industry average. |
| Zymeworks upgraded to Buy at Jefferies with increased clarity |
| As previously reported, Jefferies analyst Akash Tewari upgraded Zymeworks (ZYME) to Buy from Hold with a price target of $11, up from $7.70. There's been clarity around three key issues over the last few months - the capital structure, the viability of ZW25 in an increasingly competitive HER2 market, and details on its pipeline - but the stock is back near $6-$7 per share, which is similar to where it was after the capital raise at the start of 2022, noted Tewari. The analyst thinks Jazz Pharmaceuticals (JAZZ) will exercise its $325M option and believes updated data at ASCO GI in January on zani+chemo in first-line GEA may continue to show competitiveness versus other agents |
And this is what I am watching today: VKTX, NFLX, ROKU, SQ, ULTA, BLK, NFLX. SQ, RARE, AYX, ROKU,, SPOT, BURL, WYNN, NVDA, COST, DIS, DKS, U, TWLO, WING, CMG, and DPZ.
Let's have a great day!
-JB