It was a mixed bag for stocks yesterday, with the Dow closing in the green while the S&P and Nasdaq closed in the red, the latter of which dropped 1.33%. Asia markets closed mixed overnight while Europe stocks are mostly green this morning. U.S. futures are pointing to a mixed open, The Dollar is lower while Yields, Oil, and Gold are all higher.
And this is what UPB is reading this morning: Wednesday Morning Reads
It was an odd session for stocks on the second trading day of 2022. Rising Yields had folks taking profits in Tech/Cloud names and pouring the money into Value names... ie. Dow components.
Looks like 2022 going to be a fun one. You have companies who haven’t disrupted sectors since 1913 $F and the $1960s $IBM up 10% and 2% respectively, while the Nasdaq is getting pummeled with many names down 78, 9, and 10%…
— Option Millionaires (@OMillionaires) January 4, 2022
Many Tech/Cloud names that were up 50/75/100%+ in 2021 were down 7%+ at times before finding a bid at 2pm to pare some of the losses. It is going to be an important session today. Yesterday was the end of the historically bullish Santa Rally Season. If the repositioning is done, then many of the names that sold off yesterday like SHOP, ZS, DDOG, NOW, NET, ect) should find some bids. If not, there will likely be some more nasty and surprising downside moves before this all said and done.
I had added some NET puts at the open to play for more downside in the growth/tech names. The $110 puts seemed very inexpensive on a risk/reward basis once it broke under its 200dma. I was able to close most of my calls out for 100%, 400%, and over 1000% and held a few into today. If it fails to catch a bid today, I think $100 could be in the cards. A bounce to $115 today and I will close the last few:
NOW, ZS, and PANW were names I was eyeing as well but the premiums were high. And when it comes to PANW and NOW, the spreads are also wide... meaning it will be hard to enter and harder to exit. NOW is the one I will be watching today. If it can't hold $600, may look at some puts to play for a move to $550:
DOGZ held up well despite the market weakness. Seems only a matter fo time before the $9 handle is breached. If it can't hold $8, I will look to exit my calls and add some later dated strikes:
Still eyeing the same names for bounces but likely not going to be too aggressive either way today. We do get the Fed minutes at 2pm, so could add a little volatility.
Thanks everyone for your patience with the Top 5 Webinar. My voice is still raspy and I haven't been able to get as much work in during market hours(and after-hours). I'll post when the Webinar is up but may not be until Friday now.
Here are the analyst changes of note for today:
| Humana price target raised to $520 from $500 at Truist | |
| Truist analyst David MacDonald raised the firm's price target on Humana to $520 from $500 and keeps a Hold rating on the shares as part of a broader research note on Healthcare Services. The analyst is positive on several names in the group thanks to their "sound fundamentals, brisk core demand drivers, a relatively benign regulatory backdrop, and the ongoing move towards value-based care". MacDonald adds that strong free cash flow and financial flexibility across much of the sector should fuel continued strategic M&A, and he sees valuation risk-rewards in the group as "attractive | |
| Anthem price target raised to $540 from $490 at Truist | |
| Truist analyst David MacDonald raised the firm's price target on Anthem to $540 from $490 and keeps a Buy rating on the shares as part of a broader research note on Healthcare Services. The analyst is positive on several names in the group thanks to their "sound fundamentals, brisk core demand drivers, a relatively benign regulatory backdrop, and the ongoing move towards value-based care". MacDonald adds that strong free cash flow and financial flexibility across much of the sector should fuel continued strategic M&A, and he sees valuation risk-rewards in the group as "attractive | |
| Hydrofarm price target lowered to $50 from $65 at Truist | |
| Truist analyst Bill Chappell lowered the firm's price target on Hydrofarm (HYFM) to $50 from $65 but keeps a Buy rating on the shares. Industry weakness is likely to be worse than expected in Q4, the analyst tells investors in a research note, citing the company's largest competitor Scotts Miracle-Gro (SMG) announcing that organic sales for its hydroponics segment would be down 40% from last year vs. its initial view of a 10% decline. Chappell adds however that he expects the Hydrofarm management to push out the timing of expected recovery from the adverse impact of the cannabis glut from spring of this year to summer when comparisons ease | |
| Wingstop price target raised to $200 from $195 at BMO Capital | |
| BMO Capital analyst Andrew Strelzik raised the firm's price target on Wingstop to $200 from $195 and keeps an Outperform rating on the shares. Chicken wing prices declined meaningfully through Q4 and supply chain data suggests potential for prices to continue sliding in 2022, the analyst tells investors in a research note. Strelzik adds however that "favorability relative to consensus" is not out of the question, and he is growing more optimistic about potential for favorability in 2022 | |
| Oppenheimer adds Crowdstrike to Top Picks | |
| Oppenheimer analyst Ittai Kidron is adding CrowdStrike to his top picks. His bullish stance is predicated on his belief that CrowdStrike has successfully evolved into a "best-of-platform" security vendor, can sustain its robust revenue growth, will capitalize on a growing opportunity within XDR, and can build a comprehensive Zero Trust platform that covers endpoint, data, and identity security. These elements support a premium multiple, and Kidron recommends investors view the recent pullback for the shares as a buying opportunity. The analyst has an Outperform rating and a price target of $300 on the shares | |
And here is what I am watching today: SPOT, MED, DOGZ, DKNG, FUBO, TREE, TWLO, CTXS, OPRK, RDFN, Z, EXAS, CDLX, and DXCM.
And if the market fails to find a bid, puts in NOW, ZS, PANW, TEAM, and MDB.
Let's have a great day!
-JB