June 14th, 2022

Markets tumbled on Monday, in a continuation of the sell-off on Friday on the heels of a higher than expected CPI number and as Crypto currencies tumbled over the weekend. The S&P fell nearly 4% while the Nasdaq closed nearly 5% lower - needless to say, it has been 3 nasty sessions in a row. Asia markets closed lower overnight while Europe stocks are in the red this morning. U.S. futures are pointing to a small bounce at the open, the Dollar, Yields, and Gold are lower while Oil is higher.

And this is what UPB is reading this morning: https://www.optionmillionaires.com/morning-reads-42/

Here is the market performance over the past 4 sessions:

It has to be up there in terms of worst performance over a 3-4 day time frame. I keep thinking that so much of the negative catalysts have been out there, that the cards have been put on the table. Inflation, rising rates, logistical concerns, higher inventory levels at retailers... ect. And now we have the reverse of the 'wealth effect'. Leading into this year we had rising assets classes led by equities, crypto, and home prices. Now that those are declining it will lead to folks spending less, cutting back on non-essentials, and in essence, sparking a recession.

Maybe this is a clone of 2008, but it is hard for me to wrap my head around that outcome pending any black swan event like a major company default or some other issue coming out of left field. The reset in momentum and tech names has been going on for 6-8 months now, it is only now that the major indexes are following due to the Mega-cap names carrying a lot of the weighting. Puts have been tough with premiums thru the roof. I would much rather look at some speculative/.inexpensive calls to play for bounces for now. See if the SPY can regain that $380 handle ahead of tomorrows Fed statement and presser:

Many are now saying the Fed will raise rates .75% tomorrow. I actually think that may spark markets higher. It is about time they pull the band-aid off and get this rate cycle issue done with and then re-adjust as we head into the fall.

It was a rough day for the stocks I am in:

BPT opened lower and found sellers, taking it down over 12% at times before bouncing to close at 22.52. It is gapping higher this morning and still confident in a move into the high $20s in the coming days, though will continue to be volatile:

IBM actually reversed morning lows and turned green for some of the session yesterday before finding pressure to close red with the rest of the market. Will need to get its act together here soon:

I added some CME calls yesterday as I outlined on the morning watch list. The company should benefit from this rise rate environment. The stock soared once it broke $200, testing $206 before pulling back to close at $202.99. I was able to close some of my calls to cover some costs and will look to do the same today and then hold the rest for a possible test of $215 into Friday:

ICE also looks interesting here. If it holds green in the morning I may look at some speculative calls to play for a move back over $100:

Lastly, POOL is back on watch. If markets find any footing today could start a move back over $400:

Here are the analyst changes of note for today:

Oracle price target lowered to $82 from $100 at JPMorgan
JPMorgan analyst Mark Murphy lowered the firm's price target on Oracle to $82 from $100 and keeps an Overweight rating on the shares. The company last night reported "surprisingly solid" growth while it braces for a potential recession, Murphy tells investors in a research note
Pool Corp. price target lowered to $400 from $485 at Jefferies
Jefferies analyst Stephen Volkmann lowered the firm's price target on Pool Corp. to $400 from $485 and keeps a Hold rating on the shares. He is lowering his estimates for 2023 and 2024 after 75% of respondents in his recently conducted business-to-business survey of pool builders indicated that they expect demand to be flat or down once current backlogs were depleted. Pool Corp. gets 60% of revenues from recurring activities, which should mitigate the impact from lower new pool builds, but Street estimates "will still need to come down," Volkmann contends
AWS has 'small' risk from potential start-up spend slowdown, says Morgan Stanley
Morgan Stanley analyst Brian Nowak said his talks with industry experts lead him to estimate that about 20%-30% of workloads on Tier 1 Clouds come from Software-as-a-Service and Internet companies, but that a fraction of this comes from private companies he sees as most at risk to cut spending in the near-term. In that context, he still has not heard of sizeable pullbacks in spending and believes AWS should benefit from its diverse and growing customer base across a growing number of industries and strong backlog, Nowak said. AWS' risk from a potential slowdown in start-up spending that is estimated at less than 10% of total AWS revenue "seems relatively small," said Nowak, who has an Overweight rating and $175 price target on Amazon shares
New York Times price target lowered to $40 from $56 at Morgan Stanley
Morgan Stanley analyst Thomas Yeh lowered the firm's price target on New York Times to $40 from $56 and keeps an Overweight rating on the shares. While the company's investor day boosted confidence in the total addressable market, the company's investments, and possible macro headwinds, present downside to medium-term margin expectations and he is lowering estimates, Yeh tells investors. However, the runway for digital subscriber growth across news and lifestyle products remains "compelling" and he thinks the underlying structural operating leverage of scaling a digital subscription business is supportive of greater long-term margin potential, Yeh added
Morgan Stanley says 'very prudent' to shift some Tesla production to Q3 from Q2
Morgan Stanley analyst Adam Jonas noted that multiple media sources reported that Tesla CEO Elon Musk has "again" sent a late quarter communication to employees trying to "rally the troops" at the end of a difficult quarter and the analyst thinks the disruption from local Covid lockdowns in China is "understandable, if not fully in consensus forecasts at this time." Jonas estimates that consensus forecasts of less than $18B total company revenues appear to discount a sequential decline in delivery volume and he calls it "very prudent" to shift some production and EBITDA from Q2 to Q3. However, he adds that Tesla has shown throughout its history it can make up substantial lost ground with accelerated deliveries into the close of a quarter and what may be lost in Q2 could "just provide pent-up sequential tailwinds" for Q3. Jonas maintains an Overweight rating and $1,300 price target on Tesla shares
IAC price target lowered to $130 from $150 at Cowen
Cowen analyst John Blackledge lowered the firm's price target on IAC to $130 from $150 and keeps an Outperform rating on the shares. The analyst said it remains his best Smidcap idea for 2022, as the company's portfolio businesses trade at a significant conglomerate discount. He said given macro headwinds driving multiple compression across the industry, he lowered his sum-of-the-parts target.

And this is what I am watching today: POOL, BPT, WYNN, ICE, CME, HSKA, TZA, ROKU, LOVE, U, and SPOT.

Let's have a great day!


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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