FEBRUARY 19TH, 2020 WATCH LIST

Good morning!  Stock futures are modestly green, on the heels of a positive  session overseas, with European markets up some  .7% to .9%.   Tesla is back over $900, up over 8% pre-market after posting a pre-market gain of 7% yesterday.   China is  pledging more stimulus to fight Virus woes.

It's UPB here this morning for the watchlist.   After a Cal Ripken'esque morning watchlist streak, JB is taking as well deserved respite today and will likely be in and out today, and the rest of the week.    Lucky for us the market will still operate normally in his absence.

Here we sit just a pebbles throw from fresh record highs.  This after Apple warned late on Monday about the Coronavirus affecting production.  That Monday night, Tuesday morning gap lower has just been filled with the Nasdaq futures closing in on 10,000.

I think market participants are starting to realize exactly why this market seems to feed on negativity.    Bad news means  the FED can continue its easy money policy.  Low growth, low GDP, no inflation, means the FED can keep rates low or even lower for longer.

The market is already expecting another FED rate but by July with odds even betting on two rate cuts by then.  Wow.  This with stocks near new record highs!  Yep!

The market sniffed out the start of a fresh rate cut cycle at the lows in December 2018.   And right now its pricing in more of the same.  If interest rates were 10% today, the stock market would not be trading where it is today.  Clearly interest rates and cheap money are fueling this market.  However look at  recent earnings reactions to names like Apple and Amazon  as confirmation that these prices are indeed real, reflecting not just cheap money, but also real earnings.

The bears still say, as they have been saying for well over 5+ years, that this is just another bubble.   And perhaps it is.  Perhaps we will look back 10 years from now and wonder how Tesla was trading at $950 a share.  Or perhaps we will look back 10 years from now and say.. why weren't we long TSLA at $900 or AAPL at $320?   I don't think anyone can say for certain what lies ahead.  But clearly this bull market continues to point up.  The trend remains up.  And until the Central Banks put their feet on the brake pedal, its tough betting against more upside.

I love flipping the perspective.   Flip the S&P500 around.. and would you buy it?  It still looks a a great short... or something you don't want to be buying...

With that being said... lets get into some stocks I am watching.

I still like Dropbox.  And while some of the DBX calls worked nicely, I wasn't able to close my last lot out on Friday, which was disappointing.  However I am looking for a longer term entry with my eyes set on $20+

DBX

The tide is turning, and while it may take a little longer for momentum to shift I think its coming and when it does it will be a swift 15-20% reversal higher.

FSLY

I entered some calls for earnings  - they report on Thursday.  It's  a high risk trade.  However last report it ran nicely ahead of it.    I think there is a good chance of just that.  And a premium build into the report.

 

Analyst Action today:

• Upgrades:
  • NVIDIA (NVDA) upgraded to Outperform from Mkt Perform at Bernstein; tgt raised to $360
• Downgrades:
  • Appian (APPN) downgraded to Hold from Buy at Needham
  • ASGN Incorporated (ASGN) downgraded to Hold from Buy at Jefferies; tgt lowered to $65
  • Culp Inc (CULP) downgraded to Hold from Buy at Stifel; tgt lowered to $11
  • Fluor (FLR) downgraded to Neutral from Outperform at Credit Suisse; tgt lowered to $16
  • Fluor (FLR) downgraded to Hold from Buy at Canaccord Genuity; tgt $14
  • Legg Mason (LM) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt raised to $50
  • Sunrun (RUN) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets
  • Tencent Music (TME) downgraded to Perform from Outperform at Oppenheimer
• Others:
  • Accenture (ACN) initiated with an Overweight at Atlantic Equities; tgt $246
  • Alector (ALEC) initiated with a Buy at Stifel; tgt $44
  • BridgeBio Pharma (BBIO) initiated with a Buy at Mizuho; tgt $51
  • Cadence Design (CDNS) initiated with an Outperform at Robert W. Baird; tgt $93
  • Camtek (CAMT) initiated with a Buy at Needham; tgt $14
  • Cognizant Tech (CTSH) initiated with an Underweight at Atlantic Equities; tgt $65
  • Denali Therapeutics (DNLI) initiated with a Hold at Stifel; tgt $26
  • Guidewire Software (GWRE) initiated with an Outperform at Robert W. Baird; tgt $143
  • iHeartMedia (IHRT) initiated with a Buy at Guggenheim; tgt $21.50
  • Manhattan Assoc (MANH) initiated with an Outperform at Robert W. Baird; tgt $97
  • Model N (MODN) initiated with an Outperform at Robert W. Baird; tgt $41
  • Prevail Therapeutics (PRVL) initiated with an Outperform at Oppenheimer; tgt $25
  • RealPage (RP) initiated with an Outperform at Robert W. Baird; tgt $72
  • SI-BONE (SIBN) initiated with a Buy at Needham; tgt $27
  • Signature Bank (SBNY) initiated with a Neutral at DA Davidson; tgt $160
  • Synopsys (SNPS) initiated with an Outperform at Robert W. Baird; tgt $190
  • Veeva Systems (VEEV) initiated with an Outperform at Robert W. Baird; tgt $184
  • Wash. Federal (WAFD) initiated with an Equal-Weight at Stephens; tgt $36

Movers this morning:

Gapping up
In reaction to earnings/guidance:

• SSTI +18.2%, ENPH +13%, GRMN +7.5%, HLF +5.5%, FVRR +5.4%, LZB +4.6%, TPH +4.3%, HQY +4.3%, SCPL +4.2%, SAH +3.6%, FANG +3.2%, TIVO +3.1%, RPAI +3.1%, ATHM +2.7%, DVN +2.3%, DISH +1.9%, AG +1.7%, ONE +1.6%, RCEL +1.6%, GSS +1.4%, TRTX +1.2%, QTS +1.1%

Other news:

• BBBY +4.6% (discusses recent transactions and $1 bln capital allocation strategy)
• IAG +1% (reports total attributable proven and probable reserves)
• INCY +1% (announces pivotal Phase 3 study from the TRuE-AD clinical trial program met its primary and secondary endpoints)

Analyst comments:

• TSLA +7.4% (target raised to a Street high $928 from $729 at Piper Sandler)
• ALEC +3.5% (initiated with a Buy at Stifel)
• NVDA +1.5% (upgraded to Outperform from Mkt Perform at Bernstein)
• DNLI +1.5% (initiated with a Hold at Stifel)
• PRVL +1.2% (initiated with an Outperform at Oppenheimer)

Gapping down
In reaction to disappointing earnings/guidance:

• GRPN -24.6%, SGMS -13.2%, PLMR -9.9%, KNL -9.7%, DNOW -8.5%, AMED -8.4%, STNG -4.7%, BLUE -3.1% (also announces mixed shelf offering), KAR -3%, BHC -2.8%, NTR -2.7%, TXG -2.4%, ELAN -1.5%, HSTM -1.4%, BKD -1.3%, ENBL -1.2%, FDP -1.2%, EVBG -0.9%

M&A news:

• ALLY -8.2% (to acquire CardWorks for $2.65 billion)

Other news:

• DT -4.7% (launches 25 mln share offering by selling stockholders)
• NEE -2.6% (announces intended sale of $2.5 bln of equity units)
• KRC -2.4% (prices 5 mln shares of common stock at $86.00 per share)

Analyst comments:

• RUN -2.3% (downgraded to Sector Weight from Overweight at KeyBanc Capital Markets)
• CULP -1.2% (downgraded to Hold from Buy at Stifel)
• TME -0.5% (downgraded to Perform from Outperform at Oppenheimer)

 

Trades I Am looking at today:

$DBX  March  $20 calls  for  $.50  ( like the long term  breakout potential)

$TLRY  $18 weekly calls $.30  (high short interest -  speculative quick momentum trade)

$X  $9 Weekly calls $.09  -  with two + days to go, stock setting up for another sharp move - short to medium term