Markets reversed all of Wedneday's post-Fed gains and then some on Thursday, with the S&P closing down 3.25%. Asia markets closed mixed overnight while Europe indexes are in the green this morning. U.S. futures are pointing to a bounce, the Dollar, Yields, and Gold are higher while Oil is lower.
And this is what UPB is reading this morning: https://www.optionmillionaires.com/morning-reads-44/
Markets went back into sell mode on Thursday, reversing any positive sentiment from the Feds .75% rate hike on Wednesday. Social Media, news outlets, newspapers, TVs, and everywhere you look all spew a bearish view on there markets and where things are headed. It is hard not to see some negative headline around inflation, mortgage rates, job cuts, ect. ect. It has become so bad, folks just post anything even if it is completely misleading. I took offense to one post that came across my feed last night:
There is no doubt that the cost of buying a house increases as rates increase. It also reduces ones buying power. Let's say someone was looking at a $500k house with 20% down back in the fall of last year when rates were 3%. That would mean they would have a loan for $400k and pay $12k in interest the first year or $1200 a month in interest payments, the rest to principle, taxes... ect. Fast forward to today and rates are near 6%. So that same person looking at a house for $500k and 20% down would be paying around $24,000 in interest payments in the first year or $2000 a month in interest payments. So the same house would cost $800 more a month just to cover interest. Those who are on the fence when it comes to qualifying, ie. debt to income ratio, may not qualify for that same loan, hence buying power comes down. The good thing is nearly 90% of homeowners have a rate at or below 4% - well not a good thing fore someone searching for their first home - but could be a factor that keeps home prices elevated despite rising rates as there will still be a supply/demand issue. Housing is the last shoe to drop imho - if prices really start to fall then I think more downside is coming. If somehow rates stabilize and inflation starts topping, then maybe we are nearing some type of bottom.
The SPY broke into the $360s yesterday, testing $364 before bouncing. If that can hold today will look at some lotto calls. Don't forget, markets are closed Monday:
I went and added some NTR calls yesterday as a play on higher commodity prices and stronger demand(lower supply as well). I traded NTR back at the end of 2020 and into 2021 with some success, and at much lower prices. Think this can buck the trend and start heading up into the $90s and above in the coming weeks:
Another rough session for BPT, closing down 8%. The chart still looks decent and I still think this will trade higher in the coming weeks and into the mid-high $20s and beyond:
CME had a decent session yesterday despite the market carnage and was able to close in the green. The more it churns here, the better the odds of an outsized move soon. Still have some hope for the rest of my calls today and may look at some strikes to play for the eventual move to $215+:
I was looking at TZA calls as a hedge yesterday. Will be looking again today if the market loses its bid and the SPY crosses that $364 handle. Maybe some $54 weekly lotto's or some calls into next week:
ROKU and WMT announced a deal yesterday where customers can buy products at WMT directly on the ROKU platform. Just another feather in ROKU's cap and another reason why I think this will be back into the $100s soon - once the dust settles. May look at some later dated strikes today:
Will keep things small again today and will be watching U, SPOT, ROKU, and MDB for potential lotto plays.
Here are the analyst changes of note for today:
| U.S. Steel price target lowered to $23 from $30 at BMO Capital |
| BMO Capital analyst David Gagliano lowered the firm's price target on U.S. Steel to $23 from $30 and keeps a Market Perform rating on the shares. The company's mid-quarter earnings update was "better than expected", but he is also cutting his Q2 EPS view to $3.83 from $4.11 and his FY22 view to $12.57 from $12.64 due to "lack of catalysts", the analyst tells investors in a research note. Gagiano adds that given the recent significant weakness in shares and continued weakness in underlying spot prices, this update may be "well-received initially" |
| Peloton price target lowered to $14 from $20 at Evercore ISI |
| Evercore ISI analyst Shweta Khajuria lowered the firm's price target on Peloton Interactive to $14 from $20 and reiterates an In Line rating on the shares. The stock closed Thursday down 7% to $9.45. Based on survey results and industry data points, the analyst believes consumer demand trends, especially for at-home fitness equipment items, remain soft with the potential for continued softness through this year. As such, Khajuria cut fiscal 2023 and 2024 revenue and EBITDA estimates for Peloton, driven by reduced Connected Fitness net additions estimates. Only 9% of respondents in Evercore's survey said they are very likely to be in the market for at-home gym equipment over the next 12 months and 35% said they are very unlikely to be in the market for "at home" fitness, Khajuria points ou |
| QuidelOrtho resumed with Neutral from Underweight at JPMorgan |
| JPMorgan analyst Casey Woodring upgraded QuidelOrtho to Neutral from Underweight with a price target of $110, up from $80, following a period of restriction. The acquisition of Ortho Clinical Diagnostics gives Quidel the portfolio depth and commercial breadth to compete globally, Woodring tells investors in a research note. However, the anlasyt is skeptical of the combined company's long-term revenue growth guide of 9%-11%, particularly legacy Quidel's implied 17% outlook "heavily weighted toward the launch of Savanna into a market with uncertain demand for another MDx respiratory testing platform. |
| titch Fix price target lowered to $12 from $15 at Canaccord |
| Canaccord analyst Maria Ripps lowered the firm's price target on Stitch Fix to $12 from $15 and keeps a Buy rating on the shares. The analyst said while the company's core subscription offering continues to resonate with consumers seeking personalized clothing recommendations, the company is increasingly focused on improving its Freestyle offering to capitalize on the larger addressable market for on-demand purchases. She noted while management continues to fine-tune traffic acquisition and conversion tactics, she expects ongoing learnings and refinements to the customer experience and marketing framework should help the company return to growth and profitability sometime in fiscal 2023 |
Adobe price target lowered to $415 from $450 at UBS |
| UBS analyst Karl Keirstead lowered the firm's price target on Adobe to $415 from $450 and keeps a Neutral rating on the shares after its Q2 results and below-consensus Q3 and FY22 guidance. Large deal delays have impacted the company's expectations for the second half of the year, the analyst tells investors in a research note |
| B. Riley sees challenges for Blink Charging, starts with Neutral |
| B. Riley analyst Christopher Souther initiated coverage of Blink Charging with a Neutral rating and $15 price target. The analyst sees challenges for Blink and its preferred Blink-owned model. Attempting to scale meaningful revenue from charging fees will be a challenge, with low utilization likely to continue in the near term and our expectation of a lack of pricing power long term, Souther tells investors in a research note. The analyst wants to see more transparency around the company's utilization rates to become more positive on the stock given the current ownership model preference |
And here is what I a am watching today: ROKU, U, SPOT, MDB, BPT, DUST, TZA, CVGW, NTR, ICE, and CME.
Lets' have a great day!
-JB