Stocks squeezed in the last hour of trading on Friday with the S&P able to reverse bear market territory at 3pm to close slightly in the green - I wouldn't call it capitulation just yet but a positive sign. The negative is that the Dow closed lower for the 8th week in a row while the S&P and Nasdaq closed lower for the 7th week in a row - something that has not happened since 1932 and 2001 respectively. Asia markets closed mixed overnight while Europe indexes are in the green this morning, U.S. futures are pointing to a bounce, the Dollar is lower while Oil, Yields, and Gold are higher.
And this is what UPB is reading this morning: https://www.optionmillionaires.com/morning-reads-28/
It was another rough week for stocks, with the S&P finishing down over 3%... a number that would have been much worse without a last hour squeeze on Friday. This week the earnings season winds down, we get the Fed minutes Wednesday, and we get the 2nd read on 1Q GDP Thursday.
Here are some of the implied moves for earnings next week as the earnings (90% of the S&P has reported): https://www.optionmillionaires.com/some-implied-moves-for-earrings-this-weekmay-23rd-may-27th/
Will be interesting to see if the markets can avert another red week and the S&P can stay out of bear market territory. Sellers disappeared on that bounce from $380 on the SPY. Maybe a sign that sellers are gone for now, and we can start working back into the $400s on the SPY... at least in the short-term. If the SPY can hold $390 this morning, may get a little more constructive on the call side for a short term bounce:
I closed the last of my ULTA puts on Friday to lock profits in and then went and added some Puts into this week for earnings on Thursday. I will look to close some of the calls out to cover costs and ride freebies into the report. Otherwise I will close the position before the close Thursday and look to revisit. TGT and WMT earnings sent some warning signs to the retail sector. That $340 handle on ULTA looks like key support. Once it broke on Friday the stock tumbled to $333 in short order before the end of day squeeze. $355 or so would be a spot I may look to close the position and revisit:
HSKA is a name I have liked in the past. The company sells speciality Pet healthcare products and diagnostic vet tools, amongst other things. The sector is 'recession' proof in my humble opinion. The name has been beaten up with the rest of the market and think it can see some upside in the coming days if the market finds footing, likely $120+. May look at some calls today to play for that move:
Still have my eyes on ROKU. If it can regain $97.50 or so may look at some speculative calls for a move into the $105-110 range this week:
IBM looked so promising heading into Wednesday of last week only to give back all its gains and then some from the previous 3 weeks. Not looking to add anything here as of yet and will wait for the stock to reclaim $135 or so before looking at July and further dated calls:
Also eyeing BTAI, ZYME, CMG, YOU, PLCE, and DECK today.
Here are the analyst changes of note:
| Block price target lowered to $145 from $165 at Truist |
| Truist analyst Andrew Jeffrey lowered the firm's price target on Block (SQ) to $145 from $165 to reflect reduced valuations but keeps a Buy rating on the shares. The company's business model, total addressable market, and growth trajectory are poorly understood, creating opportunity for long-term growth investors, the analyst tells investors in a research note. Block can be one of the world's most important FinTechs, rivaling Visa (V), Jeffrey adds |
| Shopify price target lowered to $475 from $550 at Jefferies |
| Jefferies analyst Samad Samana lowered the firm's price target on Shopify to $475 from $550 and keeps a Buy rating on the shares. Samana has lowered numbers for several software companies covered and reduced price targets "across the board" given stiffening economic headwinds and the looming risk of recession, considering factors that include end market exposure, cash flow support, exposure to Europe, and historical gross/net retention. Several recent datapoints suggest consumer behavior is changing quickly and that demand may also be softening, while commentary from big box retailers raised concerns on a mix shift and a slowdown in consumers' e-commerce spending, Samana said |
| ServiceNow price target lowered to $550 from $700 at Jefferies |
| Jefferies analyst Samad Samana lowered the firm's price target on ServiceNow to $550 from $700 and keeps a Buy rating on the shares. Samana has lowered numbers for several software companies covered and reduced price targets "across the board" given stiffening economic headwinds and the looming risk of recession, considering factors that include end market exposure, cash flow support, exposure to Europe, and historical gross/net retention. Several recent datapoints suggest consumer behavior is changing quickly and that demand may also be softening, while commentary from big box retailers raised concerns on a mix shift and a slowdown in consumers' e-commerce spending, Samana said |
| BigCommerce price target lowered to $21 from $25 at Jefferies |
| Jefferies analyst Samad Samana lowered the firm's price target on BigCommerce to $21 from $25 and keeps a Hold rating on the shares. Samana has lowered numbers for several software companies covered and reduced price targets "across the board" given stiffening economic headwinds and the looming risk of recession, considering factors that include end market exposure, cash flow support, exposure to Europe, and historical gross/net retention. Several recent datapoints suggest consumer behavior is changing quickly and that demand may also be softening, while commentary from big box retailers raised concerns on a mix shift and a slowdown in consumers' e-commerce spending, Samana said |
| Medtronic price target lowered to $125 from $141 at Cowen |
| Cowen analyst Joshua Jennings lowered the firm's price target on Medtronic to $125 from $141 and keeps an Outperform rating on the shares. The analyst updated his estimates ahead of its Q4 results and said his revised sales and earnings projections lag consensus targets but he still tracks the initial outlook the company provided in February |
| Datadog price target lowered to $125 from $170 at Jefferies |
| Jefferies analyst Brent Thill lowered the firm's price target on Datadog to $125 from $170 and keeps a Buy rating on the shares. Thill has lowered forecasts across 28 software companies he covers given stiffening economic headwinds and the looming risk of recession and the multiples embedded in his new price targets are 25% lower, though he warns investors that he believes there could still be downside to multiples if fundamentals weaken further. |
And here is what I am watching today: ULTA. HSKA, BPT, SQ, IBM, BTAI, ZYME, CMG, YOU, PLCE, and DECK
Let's have a great day!
-JB