July 8th, 2022 Watch List

Stocks closed higher on Thursday, with the S&P adding 1.5% and making it 4 straight sessions of gains. Asia markets closed mostly higher overnight while Europe indexes are mixed this morning. U.S. futures are pointing to a lower open, the Dollar and Oil are lower while Yields and Gold are higher.

Stocks rallied on Thursday for the 4th session in a row, putting together its best winning streak since March. Seems no news is good news. Next week the Q2 earnings season kicks off... will certainly help get some clarity on where the economy is and if we are in a recession. The market is a great pricing mechanism so would think a small recession is priced in. A nice chart here from Marketwatch on performance from when a recession began:

Of course, we won't know when the recession started(or if we are even in one). But if we already are, then the market may find some legs. Mortgage rates just experienced their fastest drop in 14 years. Next Wednesday we get the June CPI numbers. If they come in flat or lower, think we can say there is a possibility of a bottom here, even if short term. And then start looking at the earnings reports to see how bad things have gotten. Seems every day companies are coming out with lower guidance, like WDFC this morning. The June jobs report came out this morning and it was better than expected. Good news is bad news now, or at least it seems, as folks think any positive economic data will give the Fed more ammo to raise rates quicker. Will see how this gets digested today but futures tanked on the report. Would have liked to see $390+ today so hoping markets can find some bids at the open:

I locked more of my U calls in for 700%+ as the stock tested the $44s. I did not want to risk losing it all heading into expiration. Still think U has a shot at $46 today but will look to close the rest under $43.50 or so:

Another big day for Biotech names, with the IBB closing up over 2%. Was tough to chase some of the morning gaps so sat on my hands. Will watch for follow-thru this morning before adding any IBB calls. Like I mentioned yesterday, will be eyeing BIIB, REGN, VRTZ, SAGE, and others for calls:

I was watching TWLO for entry but premiums were elevated at the open and the stock pretty much churned from the opening gap. Will be watching again today for some speculative calls and/or strikes into next week for an eventual move over $100:

ROKU regained its 50dma yesterday. Still holding my July calls and may look for some August strikes to encompass earnings which should be around the first week in August:

I am still working on my ideas for the back half of 2022 and will have out this weekend, my apologies.

Here are the analyst changes of note for today:

Levi Strauss price target lowered to $22 from $25 at Wells Fargo
Wells Fargo analyst Ike Boruchow lowered the firm's price target on Levi Strauss to $22 from $25 and keeps an Overweight rating on the shares following the company's "solid" Q2 earnings results. The analyst noted that Levi Strauss beat on both EPS and revenue, although noting that GMs were a "touch weak," adding that the company maintained its FY plan "despite a softening global macro and building FX pressure." While management expressed caution regarding the low-end U.S. consumer, the company exuded strength across all channels. Following the results, Boruchow believes the stock is cheap and the risk/reward is compelling.
Oppenheimer sees improving investor sentiment towards Domino's Pizza 
Oppenheimer analyst Brian Bittner maintained an Outperform rating and $435 price target on Domino's Pizza, seeing improved investor sentiment into the company ahead of its Q2 results on July 21. The stock's outperformance over the last two months looks to be driven by the belief that Q2 represents the SSS trough and an anticipation that new management can "utilize third-party partnerships to improve fundamentals." While these factors could create a "more investable path," Bittner said he will be "more equipped to aggressively pitch" Domino's once he uncovers a positive revision cycle
BlackRock price target lowered to $729 from $902 at JPMorgan
JPMorgan analyst Kenneth Worthington lowered the firm's price target on BlackRock to $729 from $902 and keeps an Overweight rating on the shares
BioXcel Therapeutics significant room for upside seen, says Canaccord
Canaccord analyst Sumant Kulkarni noted the recent strength in BioXcel Therapeutics shares but said there is significant room for upside with the upcoming data from its TRANQUILITY Phase 2 data. The analyst is modeling a 65% probability of approval for Igalmi in agitation in AD and he remains comfortable around this probability estimate given the data he has seen so far. Kulkarni reiterated his Buy rating and $75 price target on BioXcel shares
Burlington Stores price target lowered to $120 from $135 at Loop Capital
Loop Capital analyst Laura Champine lowered the firm's price target on Burlington Stores to $120 from $135 and keeps a Sell rating on the shares. Inflation and a shift towards spending on services, not goods, are likely to drive significant reductions in consensus estimates for Burlington, Champine tells investors in a research note. The analyst's outlook for sales and earnings is well below consensus estimates for the next five quarters. An inventory glut seems endemic to the industry, so Burlington's lower prices "don't even stand out from peers in off-price or traditional retail," says Champine
Palo Alto Networks price target raised to $650 from $615 at BMO Capital
BMO Capital analyst Keith Bachman raised the firm's price target on Palo Alto Networks to $650 from $615 and keeps an Outperform rating on the shares. The firm's upside target price is $745 and implies a ~25x EV/FY24 base case FCF multiple, Bachman tells investors in a research note. He believes that Palo Alto's risk/reward is very attractive and that the stock is deserving of the firm's top pick designation
Costco sales remain healthy with no slowdown seen, says Baird
Baird analyst Peter Benedict noted Costco core comps increased roughly 11% in June right in line with the trailing six-month average. The analyst said membership trends have never been stronger, and he believes the company's entrenched value positioning and defensive sales mix provide attractive P&L durability amid deteriorating macro conditions. Benedict reiterated his Outperform rating and $560 price target on Costco shares

And here is what I am watching today: TWLO, SPOT, U, REGN, IBB, BIIB, SAGE, VRTX, DUST, GLL, and JDST.

Let's have a great day!

-JB

JimmyBob (Scott)has been trading equities for over 15 years, a majority of which were OTC micro-cap stocks. He started trading high risk stock options over the past 7 years, and has proven winning trades in excess of 15,000%.

As one of the Co-Founders of optionmillionaires.com, Scott enjoys sharing his knowledge with other investors through timely blog posts, daily watch lists in the forum, weekly webinars, and helpful advice within the chatroom.

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