Futures are pointing to a rough start to the week, with the S&P set to open down 1.7% as I write this. Asia indexes closed lower overnight while Europe stocks are also in the red this morning. The US dollar and Yields are higher while Oil and Gold are lower.
And this is what UPB is reading this morning: https://www.optionmillionaires.com/morning-reads-18/
The market is gapping lower this morning on the heels of a 5 week losing streak for the major indexes. Reading the headlines or watching the news over the weekend certainly doesn't seem to paint a great picture for the markets. This week we get some more important inflation data, with the CPI due out Wednesday morning and the PPI due out Thursday morning. If the numbers come in flat based on last Months read, could see some relief and the start of some murmurs that we have hit peak inflation. On the flip side, if the numbers come in over estimates, folks will dismiss April's data and think there is more inflation on the way and pressure stocks. Certainly something to watch.
We also have plenty off earnings this week, here are the implied moves: https://www.optionmillionaires.com/some-implied-moves-for-earnings-next-week-may-9th-may-12th-944-companies-reporting/
Think it is very easy to see the market tumble from here, and the SPY break under $400. But it seems every time folks get overly bearish, the market does the opposite. Not saying I will be loading calls, just think there is a potential for some type of relief rally this week, especially if the SPY holds $400 today:
If the SPY can't hold $400, I may start eyeing those 3x bear ETFS... especially DRV and LABD. Both of those could go parabolic if the market stays in sell-mode. Ironically DRV is still below its February highs(the last time I traded it):
So think it may offer the best hedge opportunity - though spreads are wide. Also, look at the volume since the end of April. Maybe a sign there.
I hate trading against Biotech stocks. I truly think one of the best things about markets is those companies having access to capital to do great things... ie. cure illnesses, afflictions, ailments, ect.. And then to be able to benefit on positive outcomes as a trader. Either way, in this environment, where so many Biotech names trade at valuations less than their cash holding, looks like folks don't care and are just indiscriminately selling. LABD just broke its Feb highs so could see a parabolic move as well. I thought $100 for DRV and $150 for LABD back in Feb. so may look to add calls as hedges for those possible outcomes:
I added more IBM calls on Friday. The stock was holding up well despite the market sell-off. They went ex-divy today, which could account for some of the bidders on Friday. Still think this trades into the $140s and higher, especially if the market finds any footing. Will look to close the last of my May $140s soon and then just hold the Junes:
I flipped some TZA calls on Friday for some profits. TZA is a great ETF to trade on an intra-day or even on weekly basis. There is plenty of liquidity on the options, and it offers way to hedge. Don't be surprised to see me add some calls and/or puts this week as these wild swings offer some opportunities. Still think the stronger US dollar is a net positive for small-caps and they will outperform the major indexes or at least not fall as much:
BTAI reported earnings this morning and updates on its recent operational highlights. The stock is flat here in the pre-market after testing lows on Friday. Hopefully can get a spark today and resumes its uptrend:
Other names I am watching:
CUTR potential bull-flag for a move to $75+:
APPS back over $35 if market finds footing this week - may look at some later dated June strikes rot encompass earnings in a few weeks:
Lastly, DUST looks interesting here with Gold falling. Maybe a move to $18+ in the coming days:
Here are the analst changes of note for today:
| Proto Labs price target lowered to $50 from $56 at Craig-Hallum |
| Craig-Hallum analyst Greg Palm lowered the firm's price target on Proto Labs to $50 from $56 and keeps a Hold rating on the shares. The analyst notes Proto Labs reported Q1 results that were highlighted by better-than-expected gross margin, which resulted in a meaningful bottom-line beat. Commentary suggests early Q1 was impacted by the resurgence of COVID, but demand levels have since recovered nicely thereafter, Palm adds. While the analyst is pleased with the progress made this quarter, he continues to look for further execution before he gets more bullish |
| DraftKings price target lowered to $30 from $40 at Craig-Hallum |
| Craig-Hallum analyst Ryan Sigdahl lowered the firm's price target on DraftKings to $30 from $40 and keeps a Buy rating on the shares following quarterly results. The analyst notes revenue was in-line with expectations and losses/cash burn remain high, which likely isn't enough to turn sentiment in a tough market. That said, forward expectations for spend and losses have increased virtually every quarter since DraftKings has been public, but Q1 results and 2022 guidance were both better on the expected loss versus Street expectations, Sigdahl adds. While he thinks DraftKings will continue to aggressively invest, if this is peak losses and incrementally the business can start to show improving operating leverage, the analyst believes investor sentiment could start to improve |
| Heska should be bought ahead of next week's analyst day, says Piper Sandler |
| Piper Sandler analyst David Westenberg noted that Heska, like others in Animal Health, started the year off slow, but given that veterinary volume trends were flagged on competitor earnings calls as meaningfully down, he thinks investors expected the company's Q1 miss. Heska being able to leave guidance intact will "be a surprise" and he recommends buying the stock before Heska's analyst day next week on May 17 with the stock well off its highs, Westenberg tells investors. He keeps an Overweight rating on Heska with a $190 price target |
| Planet Fitness added to 'Tactical Outperform' list at Evercore ISI |
| Evercore ISI analyst Warren Cheng is initiating a positive Tactical trading call on Planet Fitness ahead of the company's Q1 earnings release and has added the stock to the firm's "Tactical Outperform" list. Cheng has an Outperform rating and $130 price target on Planet Fitness shares |
| Sonos price target lowered to $45 from $50 at Jefferies |
| Jefferies analyst Brent Thill lowered the firm's price target on Sonos to $45 from $50 and keeps a Buy rating on the shares, telling investors that he is cautious into the company's upcoming earnings report on fears of a guidance cut. While he remains a fan of the long-term opportunity, he has fear about potential downside to FY22 guidance as macro softens and consumer spending shifts from the home, noted Thill, who has cut his own FY22 and FY23 revenue estimates for Sonos by 5% and 7%, respectively |
And here is what I am watching today: CUTR, APPS, DUST, TZA, DRV, LABD OLED, IRTC, ROKU, TWLO, SITE, EDIT, SAM, ALGN, DDOG, MDB, TEAM, RNG, and ZS.
Let's have a great day!
-JB