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• DiscoverGold
Equity Fund Inflows $3.1 Billion; Taxable Bond Fund Inflows $5.8 Bil Billion
By: Thomson Reuters | August 14, 2019
FUND FLOW REPORTS FOR THE WEEK ENDED 08/14
For the week ended 08/14/2019 ExETFs - All Equity funds report net outflows totaling -$4.640 billion, with Domestic Equity funds reporting net outflows of -$4.862 billion and Non-Domestic Equity funds reporting net inflows of $0.221 billion...ExETFs - Emerging Markets Equity funds report net inflows of $0.215 billion...Net inflows are reported for All Taxable Bond funds of $5.756 billion, bringing the rate of inflows for the $2.987 trillion sector to $2.109 billion/week...International & Global Debt funds posted net outflows of -$0.646 billion...Net inflows of $4.032 billion were reported for Corp-Investment Grade funds while High Yield funds reported net inflows of $0.346 billion...Money Market funds reported net inflows of $10.587 billion...ExETFs - Municipal Bond funds report net inflows of $1.502 billion.
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• DiscoverGold
Citron Favorite Flashes Buy Signal
By: Schaeffer's Investment Research | August 16, 2019
• A short squeeze could also power the shares higher
• Invitae stock just pulled back to its 40-day trendline
When we last checked in on InVitae Corp (NYSE:NVTA), the genetic testing concern was fresh off a lofty bull note from Citron Research. Since nabbing an earnings-induced record high of $28.75 on Aug. 7, the shares have pulled back sharply, down 6.3% month-to-date. However, this Citron favorite -- which has more than doubled in 2019 -- is now flashing a "buy" signal, thanks to an encounter with a historically bullish trendline.
More specifically, data from Schaeffer's Senior Quantitative Analyst Rocky White shows that NVTA has historically performed well after meet-ups with its 40-day moving average, with the stock averaging a one-month return of 6.5% following the last eight signals. As you can see from the chart below, this trendline has neatly contained the stock's August pullback. From its current perch at $25.18, a jump of similar magnitude would have NVTA back near $26.80.
A rally could be jump-started by a continued exodus of short sellers. Short interest fell 6.2% in the most recent reporting period, but these bearish bets still account for 21% of the equity's total available float, or nearly a week's worth of pent-up buying power, at the average pace of trading.
There could also be an unwinding of pessimism among options traders. The stock's 10-day put/call volume ratio of 0.47 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks 4 percentage points from an annual high. This shows that while calls have been more popular than puts on an absolute basis during the past 10 days, the rate of put buying relative to call buying has been quicker than usual.
Echoing this sentiment is the security's Schaeffer's put/call open interest ratio (SOIR) of 0.78, which ranks in the 98th percentile of its annual range,. This indicates near-term traders have rarely been more put-biased toward the genetics testing name.
It's certainly an attractive time to purchase premium on NVTA short-term options, considering they're pricing in relatively low volatility expectations at the moment. This is based on the stock's Schaeffer's Volatility Index (SVI) of 68%, which registers in the 14th percentile of its annual range. Plus, Invitae stock has a history of making bigger moves than the options market was pricing in, according to the security's Schaeffer's Volatility Scorecard (SVS) reading of 98 out of 100.
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• DiscoverGold
Daily Market Watch »» Stock Indices Daily Trend
By: Marty Armstrong | August 16, 2019
CNBC
U.S. stock futures were sharply higher ahead of Friday trading, following an extremely volatile Thursday session. The projected gains, however, would not be enough to completely erase this week's losses, amounting to 2.7% for the Dow and about 2.4% for both the S&P 500 and Nasdaq. As we hit the halfway point of August, stocks are on track for only their second losing month of the year, with the Dow down 4.8% for August, the S&P down 4.5% and the Nasdaq down 5%. The only losing month so far this year occurred in May. (CNBC)
* Treasury yields climb away from record lows (CNBC)
* Fed's Bullard says only a 'sustained' bond inversion would be a bearish signal (CNBC)
* Ray Dalio puts 40% odds on a recession before the 2020 election (CNBC)
On today's economic calendar, the government issues July housing starts at 8:30 a.m. ET. The University of Michigan's mid-August consumer sentiment index is out at 10 a.m. ET. Meanwhile, Deere & Co. (DE) is among the few companies out with quarterly earnings this morning. There are no earnings scheduled after-the bell. (CNBC)
General Electric (GE) shares saw their biggest drop in more than a decade after Madoff whistleblower Harry Markopolos targeted the conglomerate in a new report, accusing it of issuing fraudulent financial statements to hide the extent of its problems. GE shares were bouncing about 2% higher in the premarket. (CNBC)
*GE CEO Larry Culp bought nearly $2 million worth of stock (CNBC)
IN THE NEWS TODAY
Capital One (COF) employees raised concerns about issues in the company's cybersecurity unit ahead of a recent data breach, according to the Wall Street Journal. Among the issues: high turnover among senior leaders and staff, and failure to properly install software to spot and defend against hacking.
STOCKS TO WATCH
Applied Materials (AMAT) beat expectations with adjusted quarterly profit and revenue. However, the company did warn that recovery for the memory chip market would be unlikely to occur before next year.
Nvidia (NVDA) reported strong adjusted quarterly profit and better-than-expected revenue. Nvidia said its results were helped by demand for newer high end graphics chips designed for video games.
Dillard's (DDS) reported a wider-than-expected adjusted quarterly loss. The retailer's revenue was slightly below forecasts, with comparable store sales falling 1%.
WATERCOOLER
Disney (DIS) continues to break records at the box office. The company announced that "Toy Story 4" surpassed the $1 billion mark this week, becoming the fifth movie from the studio to do so this year. "Toy Story 4" is the fourth Pixar film to reach $1 billion, and it's eighth highest-grossing animated movie of all time. (CNBC)
CONTRIBUTORS
Jessica Bursztynsky
@jbursz
Peter Schacknow
@peterschack
Analyst, Options Traders See 2-Year Lows Ahead for Caterpillar
By: Schaeffer's Investment Research | August 15, 2019
• CAT is headed for its longest weekly losing streak since the 2016 election
• Put buying has picked up the pace on CAT in recent weeks
Stephens initiated coverage on Caterpillar Inc. (NYSE:CAT) with an "underweight" rating and $100 price target -- a more than 13% discount to last night's close. While the analyst in coverage waxed optimistic on the construction concern's restructuring efforts, he said a slowing global economy could create risk for the trade-sensitive name.
This is just the latest bearish brokerage note for the Dow stock, with Goldman Sachs downgrading CAT one week ago, and 10 analysts maintaining a "hold" or worse rating on Caterpillar prior to today, compared to six "buy" or better recommendations. However, the average 12-month price target of $143.61 is a 25% premium to current levels.
The skepticism toward Caterpillar stock has ramped up in the options pits, too. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 1.04 ranks in the 96th annual percentile, meaning puts have been bought to open over calls at an accelerated clip.
The January 2020 100-strike put saw the biggest increase in open interest over this two-week time frame, with almost 7,000 contracts added. Data from Trade-Alert suggests a number of new positions were purchased here on Aug. 7. Considering CAT was trading near $121 at the time, it's possible some of this is hedging activity.
The last time Caterpillar shares traded below the century mark was all the way back in May 2017. The stock has been making a series of lower highs since its early 2018 peak above $173. More recently, CAT is down 18.2% since its mid-July rejection near $141 to trade at $115.34, and is pacing for its fifth straight weekly loss -- the longest such stretch since right before the 2016 U.S. presidential election.
Read Full Story »»»
• DiscoverGold
CNBC EVENING BRIEF
The U.S. consumer came to the market’s rescue Thursday. Walmart’s earnings and solid retail sales figures led investors to believe strong consumers could keep the country out of a recession.
In addition to economic data, Wall Street has been sifting through competing factors this summer to decide whether or not the historic bull market still has legs. We’ve had the Federal Reserve cutting rates, tariff escalation (or de-escalation, depending on the day) and currency fluctuations, to name a few. Of those, the S&P reacts most dramatically to news of more tariffs, as the chart below shows.
Senior White House officials also seem to be playing the blame game when it comes to which factor is causing the market’s August turmoil. All but two — President Donald Trump and economic advisor Peter Navarro — see the trade war as driving the economic slowdown, administration officials told CNBC’s Kayla Tausche.
The president and Navarro are choosing to blame Federal Reserve Chair Jerome Powell, instead. Trump has criticized his central bank chief sharply but went a step further in recent days, labeling the Fed leader “clueless Jay Powell.”
Regardless of what’s causing it, volatility is back. The volatility index, Wall Street’s so-called fear index, has risen about 50% this month. Its daily average range is about 482 points, which is more than double the average daily range from the rest of the year.
CNBC used Kensho, a hedge fund analytics tool, to track the top ETF performers the week after the volatility index popped above 15. It found that the Utilities Select Sector SPDR Fund, which holds stocks like Duke Energy and Southern Company, has the biggest returns following bursts of uncertainty.
KHC went long at $25 this morning for a bounce and out, is the plan.
CNBC
U.S. stock futures, which had been pointing to a strong Wall Street open, swung to losses, after China threatened to take unspecified countermeasures if the U.S. goes ahead with planned new tariffs on Sept. 1. On Wednesday, the Dow saw its worst drop of the year, 800 points or 3%. It's also tracking for its largest weekly decline of 2019. Going into Thursday's trading session, the Dow was down 7% from its all-time highs in July. (CNBC)
* 30-year Treasury yield falls to new historic low (CNBC)
* Inverted yield curve explained: What it means for your money (CNBC)
Saudi Arabia has seriously ramped up its oil exports to China in recent months, doubling in the span of a year. During the same period, the kingdom's oil exports to the U.S. dropped by nearly two-thirds. The numbers signal a mix of short-term tactics and long-term strategy for the Saudis. (CNBC)
Shares of Cisco Systems (CSCO), a Dow component, were falling about 9% in the premarket after the networking equipment maker warned about futures earnings and revenue, saying its China business dropped 25%. However, Cisco did beat estimates with quarterly earnings and revenue. (CNBC)
Walmart (WMT) issues quarterly earnings before the bell, with Alibaba (BABA), J.C. Penney (JCP), and Tapestry (TPR), formerly Coach, also reporting. Applied Materials (AMAT) and Nvidia (NVDA) are out after the bell. (CNBC)
* Walmart shares jump 6% on earnings beat, raised outlook (CNBC)
On the U.S. economic calendar, data on jobless claims, productivity, and retail sales, along with the New York Fed's Empire State manufacturing index are all released at 8:30 a.m. ET. July industrial production is issued at 9:15 a.m. ET, while June business inventories and August homebuilder sentiment figures are both out at 10 a.m. ET.
IN THE NEWS TODAY
* Warren Buffett's Berkshire Hathaway raises Amazon stake by 11%, now worth $947 million (CNBC)
Novartis (NVS), the Swiss drug giant under fire for using manipulated data in a recent drug approval, has fired two top scientists at its AveXis affiliate involved in the project. The FDA threatened to take civil or criminal action against Novartis, saying the drugmaker used data it knew was inaccurate in its application for a $2.1 million gene therapy, Zolgensma. (CNBC)
STOCKS TO WATCH
Boeing (BA) is delaying delivery of an ultra-long-range version of its 777X aircraft. The delay comes as Boeing deals with the ongoing grounding of its 737 MAX aircraft as well as engine issues with the 777X.
Bill Ackman's Pershing Square Capital took a new stake in Berkshire Hathaway (BRK.B) during the second quarter, according to an SEC filing. Pershing bought 3.5 million "B" shares, currently worth about $686 million.
Pivotal Software (PVTL) is set to jump after VMWare (VMW) said it would proceed with an agreement to acquire Pivotal's class A shares for $15 per share, nearly 81% above yesterday's closing price.
CONTRIBUTORS
Jessica Bursztynsky
@jbursz
Peter Schacknow
@peterschack
CNBC (from yesterday)
U.S. stock futures were pointing to a lower open on Wall Street, following Monday's sharp sell-off and Tuesday's rebound rally. Tuesday's gain for the Dow was its largest in two months, and the S&P 500 also staged an impressive comeback. However, over the past two trading days, both are virtually flat. (CNBC)
The yield on the benchmark 10-year Treasury note today broke below the 2-year rate, an odd bond market phenomenon that has been a reliable indicator for economic recessions. The move reflects increasing worries about the global economy as investors rush into safe-haven assets. (CNBC)
* China fixes its daily yuan midpoint at 7.0312 stronger than expected (CNBC)
* China's July industrial output rose 4.8% slowest in 17 years (Reuters)
* $1 trillion US budget deficit is one big reason the Fed may have to cut rates (CNBC)
The United States Trade Representative office said new tariffs on certain consumer items would be delayed until Dec. 15, while other products were being removed from the new China tariff list altogether. The duties had been set to go into effect on Sept. 1, so the announcement eased concerns about the holiday shopping season. (CNBC)
* Mattel, Hasbro surge after US delays tariffs on China-made toys (CNBC)
* Retail stocks surge after tariffs for clothing, footwear delayed (CNBC)
A busy day for government economic numbers begins at 8:30 a.m. ET, with the latest figures on initial jobless claims, productivity, and retail sales. The New York Fed's Empire State manufacturing index and August Philly Fed index are also released. July industrial production figures are out at 9:15 a.m. ET. Both June business inventories and the National Association of Home Builders' August sentiment index are out at 10 a.m. (CNBC)
* Weekly mortgage refinances spike 37% in one week as rates fall further (CNBC)
Retailer Macy's (M) is out with quarterly earnings this morning, with Canada Goose (GOOS), and China's Luckin Coffee (LK) also reporting. Dow component Cisco Systems (CSCO) is out with quarterly earnings after the bell this afternoon, along with Agilent (A) and NetApp (NTAP). (CNBC)
IN THE NEWS TODAY
CBS and Viacom have agreed to merge, ending years of on-and-off talks. The new company will be called ViacomCBS, and Viacom's CEO, Bob Bakish, will be the CEO of the combined company. Joe Ianiello, who was serving as CBS CEO since last year, will be the chairman of CBS and will be in charge of CBS assets after the merger. (CNBC)
The Federal Trade Commission is prepared to break up major technology companies if necessary by undoing past mergers, Chairman Joe Simons said, as the regulator probes anti-competitive practices. He said breaking up a company is challenging, but could be the right remedy to rein in dominant companies and restore competition. (Reuters)
Alphabet Google (GOOGL) unit, Facebook (FB) and Amazon (AMZN) are among the companies that will testify next week at a U.S. government hearing on the French government's digital services tax. In July, the French Senate approved a 3% levy that will apply to revenue from digital services earned in France by big tech companies. (Reuters)
STOCKS TO WATCH
Shares of Tilray (TLRY) was falling about 9% in premarket trading after the company reported a wider-than-expected loss. The cannabis producer did see revenue beat forecasts, and said the company would "potentially" be announcing new supply deals in the coming months.
RealReal (REAL) had better-than-predicted losses in its first quarterly report since going public in late June. The online seller of secondhand luxury goods also saw revenue beat estimates. The stock was surging about 12% in the premarket this morning.
Qualcomm (QCOM) named former Palo Alto Networks (PANW) chairman and CEO Mark McLaughlin as Chairman, replacing Jeff Henderson. Former Cardinal Health (CAH) CFO Henderson will remain on the board and continue to chair the chip maker's audit committee. Qualcomm shares were under some pressure.
Myriad Genetics (MYGN) fell short of forecasts of adjusted quarterly profit and revenue. The company cited lower than expected reimbursements for its expanded carrier screening test, but said it is more optimistic going forward. The stock was losing about a quarter of its value in premarket trading.
CONTRIBUTORS
Jessica Bursztynsky
@jbursz
Peter Schacknow
@peterschack
Bearish Sentiment Builds on Deere Before Earnings
By: Schaeffer's Investment Research | August 14, 2019
• Deutsche Bank cut its DE price target this morning
• DE put buyers have been busy in recent weeks
Deere & Company (NYSE:DE) is trading down 2.4% today at $143.61, as the broader U.S. stock market sells off on recession worries. A bear note from Deutsche Bank is only adding to DE's woes, with the brokerage firm slashing its price target on the stock to $155 from $163 -- a slim 7.5% premium to current trading levels.
Diving deeper, Deutsche Bank cited Monday's "disappointing" World Agricultural Supply and Demand Estimates (WASDE) report. Additionally, the brokerage firm said a cautious tone from management following the company's fiscal third-quarter earnings report, due out before the open this Friday, Aug. 16, could spark downward revisions to 2020 estimates. Most analysts remain upbeat on DE stock ahead of earnings, with 10 of 15 maintaining a "buy" or better rating, and the consensus 12-month price target sitting up at $167.06.
Options traders, on the other hand, have been unusually bearish toward Deere in the week's leading up to the company's quarterly results. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), DE's 10-day put/call volume ratio of 2.48 ranks in the 100th annual percentile, meaning puts have been bought to open over calls at an accelerated clip.
Those purchasing short-term options are finding relatively rich premiums at the moment, per the stock's 30-day at-the-money implied volatility (IV) of 38.9%, which registers in the 93rd annual percentile -- not too surprising heading into a scheduled event like earnings. Meanwhile, Deere stock's 30-day IV skew of 18.4% ranks in the 97th percentile of its 12-month range, indicating DE puts have been more expensive relative to calls, from an IV standpoint, just 3% of the time over the past year.
The equity has a history of positive earnings reactions, closing higher the next day in five of the past eight quarters, although the two most recent reactions have been negative. DE shares have averaged a single-session post-earnings move of 3.9% over the last two years, slimmer than the 7.9% swing the options market is pricing in for Friday's trading.
On the charts, Deere stock has been making a beeline lower since its late-July 17-month peak at $171.22, down 16%. In fact, the shares have had just three positive closes so far in August, and have already racked up a month-to-date deficit of 13.3%.
Read Full Story »»»
• DiscoverGold
CNBC
U.S. stock futures were trading lower ahead of the Tuesday session, following a sharp sell-off for the second consecutive day on Monday. Global economic worries and falling yields continue to weigh on investor sentiment, driving investors to the perceived safety of gold and the Japanese yen. The Dow, S&P 500, and Nasdaq were all roughly 5% off their all-time highs set in July. (CNBC)
* China fixes its yuan midpoint at 7.0326 per dollar (CNBC)
* Bond market close to sending biggest recession signal yet (CNBC)
On today's economic calendar, the government is out with its July look at consumer prices at 8:30 a.m. ET, after July producer prices on Friday indicated that inflation remains muted. Meanwhile, earnings out this morning include Advance Auto Parts (AAP), Avaya (AVYA), and JD.com, while cannabis producer Tilray (TLRY) reports after today's closing bell.
Shares of Uber (UBER), still reeling from last week's disappointing second-quarter results, were under pressure again in this morning's premarket after dropping 7.6% to their lowest close ever at $37 each. Ahead of Tuesday trading, Uber stock was down about 18% from the ride-hailing giant's IPO per-share price of $45 in May. (CNBC)
IN THE NEWS TODAY
Oregon has joined a lawsuit to block the merger of U.S. wireless carriers T-Mobile (TMUS) and Sprint (S). Fifteen states and the District of Columbia are now seeking to stop the merger, which the states argue is anti-competitive and will cost their residents more than $4.5 billion annually. (Reuters)
* CBS and Viacom negotiating share exchange (CNBC)
Verizon (VZ) is selling Tumblr, the blogging social network that Yahoo purchased for $1.1 billion, to the owner of WordPress for a small sum. WordPress parent Automattic will reportedly acquire Tumblr along with its staff of about 200 and said the price "isn't material to Verizon." (CNBC)
Samsung introduced what it claimed to be the industry's first 108-megapixel image sensor for smartphone cameras which have a picture resolution equivalent to a "high-end DSLR camera." The sensor highlights Samsung's strategy of winning market share in China's handset industry through innovative smartphone parts. (CNBC)
* Don't buy an iPhone right now Apple's new iPhones are coming next month (CNBC)
STOCKS TO WATCH
Constellation Brands (STZ) is selling its Canadian whiskey portfolio to Heaven Hill Brands for $266 million. The deal is expected to close during the second of 2019, as Constellation moves forward with its strategy of focusing on its premium products.
Akamai Technologies (AKAM) announced a $1 billion convertible securities offering. The internet technology company intends to use $50 million from that sale to repurchase common stock.
D.R. Horton (DHI), KB Home (KBH), and PulteGroup (PHM) were all rated "buy" in new coverage at SunTrust. Among other factors, the firm points to the growth potential of all three home builders.
McDonald's (MCD) was rated "buy" in new coverage at MKM Partners, which believes that strong domestic and international sales growth is sustainable for the restaurant chain.
CONTRIBUTORS
Jessica Bursztynsky
@jbursz
Peter Schacknow
@peterschack
CNBC
Worries about the ongoing trade war and slowing global economic growth continue to trouble investors, as U.S. stock futures were pointing to a sharply lower open this morning. The Dow, S&P 500, and Nasdaq were all riding two straight weeks of losses, with August tracking as only the second down month of the year. However, 2019 still remains strong with yearly gains ahead of Monday trading of 12.7% for the Dow, 16.4% for the S&P 500, and nearly 20% for the Nasdaq. (CNBC)
The People's Bank of China set the official midpoint reference for the yuan at 7.0211 per dollar today, weaker than Friday's session, but stronger than what market watchers predicted. This is the third consecutive session in which China's central bank set the midpoint at a level weaker than the psychologically important 7-yuan-per-dollar level. (CNBC)
* Goldman Sachs cuts GDP growth forecast as trade war triggers recession fears (CNBC)
* 10-year Treasury yield falls below 1.7% on trade, global growth worries (CNBC)
The Treasury releases the federal budget statement for July at 2 p.m. ET, in an otherwise light day for economic numbers. Key reports out later in the week include CPI, retail sales, productivity, industrial production, and housing starts.(CNBC)
Food distributor Sysco (SYY) is among the few companies out with quarterly earnings this morning. Famous Dave's (DAVE) reports after the closing bell. Later this week, Walmart (WNT), Cisco Systems (CSCO), and Nvidia (NVDA) issue their results.
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IN THE NEWS TODAY
Presidential contender Elizabeth Warren unveiled her plan to combat gun violence, including proposals to triple the tax applied to firearm sales and raise the tax on ammunition even more dramatically. The plan comes in the wake of back-to-back mass shootings in El Paso, Texas, and Dayton, Ohio, that left at least 31 people dead. (CNBC)
Hong Kong International Airport has canceled all departures for the remainder of the day, citing serious disruption due to protests. The airport authority said today it had cancelled all flights not yet checked in by the afternoon. The increasingly violent protests since June have plunged the Asian financial hub into its most serious crisis in decades. (CNBC)
Huawei's own operating system has debuted on an internet-connected TV. The Chinese tech giant unveiled the the Honor Vision TV that will be the first device powered by Huawei's operating system, the HarmonyOS. (CNBC)
Saudi Aramco, the world's top oil producer, is buying a 20% stake, worth some $15 billion including debt, in India's Reliance Industries' oil and chemicals business, a move that would help match its enormous crude production with refining capacity, according to the Wall Street Journal.
* Saudi Aramco's first-half net income falls 12% on lower oil prices (CNBC)
BlackRock (BLK) bought a majority stake in Authentic Brands Group, the owner of well-known brands like Sports Illustrated, Nine West, and Aeropostale. The asset management firm did not disclose financial details, though the Wall Street Journal reported the stake is worth about $875 million and values the company at more than $4 billion.
Shared office space manager WeWork could unveil its initial public offering plans as soon as this week, Bloomberg reported. It'll be the first time the start-up shared its full financial picture.
Versace a unit of Michael Kors owner Capri Holdings (CPRI) issued an apology following widespread criticism in China of one of its t-shirts. The shirt identified Hong Kong and Macau which are Chinese territories as countries.(Reuters)
STOCKS TO WATCH
Tyson Foods (TSN) said about 3,800 workers at a Kansas meat processing plant will be out of work following a Friday night fire that caused significant damage. The company added that it will provide the workers with some guaranteed pay. It is not known how long the plant will be closed. (Reuters)
Novartis (NVS) is expecting faster approvals in China for its new drugs and plans to submit 50 new drug applications in China by 2023, according to a report by the Financial Times.
Anheuser-Busch InBev (BUD) is rolling out a new alcoholic seltzer aimed at college-age drinkers of its Natural Light beer brand.
ABB (ABB) shares were jumping about 3.5% in premarket trading, after the Swiss engineering company named Bjorn Rosengren as its new chief executive officer, effective in March. ABB's previous CEO left in April and the company has been in the process of overhauling its operations.
CONTRIBUTORS
Jessica Bursztynsky
@jbursz
Peter Schacknow
@peterschack
Major Pharma Sees Rising Tide in Short Interest
By: 24/7 Wall St. | August 12, 2019
Pharmaceutical companies usually are involved in a lengthy process of getting their drug candidates to market through clinical trials. There is a fair amount of risk involved, should a study come back negative or a candidate not be approved. Conversely, if a drug gains FDA approval or passes a clinical trial, there can be big upside.
The White House has promised reforms in the health care sector, such as changing the bidding process for drugs and shortening the FDA approval process. It is yet to be seen how much headway it actually can make with these reforms.
Keep in mind that short sellers betting against big pharma are taking on an added risk. They have to pay out the ongoing high dividends on top of the cost of borrowing the shares.
The July 31 short interest data have been compared with the previous figures, and short interest in most of these selected pharmaceutical stocks increased.
Short interest in Pfizer Inc. (NYSE: PFE) increased to 67.95 million shares from the previous 57.72 million. The stock was trading at $36.35 Monday morning, within a 52-week range of $35.86 to $46.47.
The number of Merck & Co. Inc. (NYSE: MRK) shares short decreased slightly to 18.78 million from 18.94 million in the previous period. Its shares were trading at $85.52, in a 52-week range of $66.07 to $87.07.
Bristol-Myers Squibb Co. (NYSE: BMY) saw its short interest increased to 124.02 million shares from the previous reading of 111.02 million. Shares traded at $47.32, in a 52-week trading range of $42.48 to $63.69.
The number of shares short in AbbVie Inc. (NYSE: ABBV) increased to 45.90 million from the previous 44.17 million. The stock was trading at $65.58, and its 52-week range is $63.31 to $100.23.
Eli Lilly and Co.’s (NYSE: LLY) short interest dropped to 11.46 million shares from the previous 12.22 million. The stock was trading at $113.77. The 52-week range is $101.27 to $132.13.
Teva Pharmaceutical Industries Ltd.’s (NYSE: TEVA) short interest decrease to 56.92 million from the previous level of 59.40 million. Shares were trading at $7.02, in a 52-week range of $6.34 to $25.96.
Read Full Story »»»
• DiscoverGold
Theo,
I enjoy everyones comments even though I can not reply to most due to the limited subscription.
Certainly market trading has changed over the years and I would trade less frequent from 20 years ago. I can not see any retail having an edge over institutional trading in short term, the probabilities of success are becoming minuscule after multiple trades.
So, we can only hope that certain market criteria can carry us to some profits even in longer periods of investing.
Best of luck with your investments.
• DiscoverGold
I enjoy reading your posts much like other similar takes on technical signals from the market. But, it has made me question the accuracy of said indicators when so much of the market today is driven by algos. When those computers kick in (either buying or selling), retail has no other choice but to step aside until it subsides... and it's obvious they don't stop until they've gone hugely oversold or overbought into market close- hence less reliable time frames in my mind given the length of time data over the years for market indicators with and without computer-driven trading.
Curious as to your take?
DP WEEKLY WRAP: Important New Look at an Old Indicator
By: Carl Swenlin | August 9, 2019
One thing that we technical analysts like to spot at price tops is an indicator flashing a negative divergence, which is an indicator that is trending downward while price continues to trend upward. Such divergences imply that internals are eroding under the rising price, and that a price correction could be next. However, negative divergences in a bull market frequently display cyclical internal weakness that doesn't manifest itself in price movement. This is particularly true of indirect indicators like the PMO, ITBM, ITVM, stochastics, RSI, etc., so I recently asked myself if there wasn't an indicator that gives us a direct, understandable result in which we could have higher confidence, and I ended up at the Percent of SPX Stocks Above Their 20EMA chart.
When a stock drops below its 20EMA, it is a sign of short-term weakness, and it is no longer participating in the market advance. At each of the market tops in October 2018, May 2019, and August 2019 (three times within a year) the indicator showed profound negative divergences as the market was making new, all-time highs. By "profound" I mean that in these cases the percent of stocks above their 20EMA dropped by as much as -45%. Think of it. Forty-five percent of the stocks participating in an advance take a coffee break. This is something I'm going to pay attention to from now on.
Finally, take note of the indicator behavior associated with the January 2018 market top -- there was no negative divergence at all. There is no mystery here. That was a broad-based parabolic advance which stretched prices well above their 20EMAs, and it was not likely that we would see a negative divergence in this case.
GLOBAL MARKETS
BROAD MARKET INDEXES
SECTORS
Each S&P 500 Index component stock is assigned to one, and only one, of 11 major sectors. This is a snapshot of the Intermediate-Term and Long-Term Trend Model signal status for those sectors.
INTEREST RATES
Because some interest rates are currently inverted, I will be including a chart so we can monitor the situation. In normal circumstances the longer money is borrowed the higher the interest rate that must be paid. When rates are inverted, the reverse is true. It is generally believed that rate inversions result from "a flight to safety." On the chart below, notice that the one-month and three month T-Bills (dotted lines) pay a higher interest rate than the one year through the 10-year T-Bonds. This is a problem for the stock market.
STOCKS
IT Trend Model: BUY as of 6/11/2019
LT Trend Model: BUY as of 2/26/2019
SPY Daily Chart: The big rising wedge resolved downward this week, but then it was recaptured. The VIX got quite oversold, and now I'm wondering we will have a repeat of market action in May, where the market will take out this week's lows and finish the decline with another spike bottom.
SPY Weekly Chart: This chart is slightly bearish because the weekly PMO has topped again.
Climactic Market Indicators: Thursday was a climax day, but I'm hard put to decide if it was an initiation or an exhaustion. There were very high levels of net breadth and net volume. Even new highs broke the contracting tops line drawn from early June. Total SPX volume was solid, but I thought it was somewhat less than that huge price advance deserved.
Short-Term Market Indicators: I am thinking that we are in the process of copying May's market action, and that when the current bounce is over, the market will head down for a lower low, and the STO-B and STO-V will form a second bottom.
Intermediate-Term Market Indicators: I have added the Stocks Above 20EMA chart to this set of indicators. It may be some time before it has another important negative divergence, but I want to keep an eye on it. The top four indicators have reached a level that has proven to be oversold for most of the period shown on the chart, and they seem to be struggling to turn up.
CONCLUSION: It appeared to me that markets became momentarily disconnected and unstable early this week. There was a different feel, as if panic had set in, but that soon passed once the selling dried up on Wednesday. As for what might happen next, I'm using May as a road map, meaning I'll be looking for another leg down to a low below this week's low.
Next week is options expiration week, so I will be looking for low volatility toward the end of the week.
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Click on "In reply to", for Authors past commentaries
Dow Jones Industrials Index (DJIA) - Turning BACK DOWN »» Monthly Summary Analysis
By: Marty Armstrong | August 10, 2019
Good weekend all! Be safe and we'll see you back here Monday
Thursday Color - Islands, Emerging Streak & Breadth, Signs Of Anxiety, Gold
By: SentimenTrader | August 8, 2019
Here's what's piquing my interest as traders try to put Monday's carnage behind them.
Island Time
It's still early, of course, but stocks are making a valiant attempt to carve out an "island" bottom. This happens when traders panic and force an unfilled gap to the downside (Monday in our current case), chop around, then buyers step in and push an upfilled gap to the upside.
Assuming today's low holds, it has a good record at preceding further gains.
No Reprieve
We saw in yesterday's note that the slide in Asian shares has seeped into broader emerging markets, with a rise in 52-week lows. Not enough to signal panic just yet, but definite pessimism.
It's no wonder, considering that the MSCI Emerging Markets index has lost value for 10 straight days. That's among its longest streaks since its inception 30 years ago.
For most indexes, that's usually a sign of over-enthusiastic sellers. But in this case, the index has continued to decline over the next 2 months every time. Small sample, but this is unusually consistent.
The relief came longer-term. That was especially the case in the two instances (besides yesterday) when the selling streak culminated in a 6-month low.
There were still hefty shorter-term losses, but both times, emerging markets were in the final phase of a meltdown, and 1-year returns were north of 36%.
Outside of the financial crisis, when nearly 20% of emerging market stocks have sunk to 52-week lows, it has led to a shorter-term bounce, not necessarily a sustained low.
More than 40% of them have hit multi-month lows. Typically good for a bounce, even including 2008's failures.
The recent selling was so widespread that the advance/decline figure hit the lowest level in 15 years.
That pushed the McClellan Oscillator to a 15-year low as well. Other times it fell below -75 typically preceded a quick snapback.
Sector Breadth
Other breadth metrics are showing large-but-not-quite-truly-extreme levels of selling pressure. What's most unusual about many of them is the market environment. They're throwing off readings typically seen during downtrending markets, not ones that are holding up relatively well.
In financials, for example, more than 40% of stocks have slid to a multi-month low, even while indexes are holding above their 200-day averages. The handful of times that's happened before, the sector rallied.
Signs Of Fear (Kinda)
We saw yesterday that equity options traders have greatly favored puts versus calls for their activity in recent days, and that has spread to other products besides just equities. The Total Put/Call Ratio has averaged more than 1.2 over the past three sessions (meaning 20% more volume in puts than calls), which has been a good medium-term sign.
Especially when the S&P was still holding above its long-term average.
Out of 59 days that qualified, 55 of them showed a positive return 3 months later.
The scary drop triggered an exodus of bulls among newsletters, as we saw yesterday, and also individual investors. This week's AAII survey showed one of the largest drops on record, pulling the Bull Ratio down to a lowly 31%. It's been rare to see this kind of pessimism even during bear markets.
During bull markets, optimism this low has preceded some ridiculously positive returns.
The pressure has caused traders to price near-term volatility expectations well above longer-term ones, which we usually see during times of extreme nervousness. The VIX Term Structure has averaged more than 1.0 for the past 5 days. Fairly uncommon during an uptrending market, and has led to decent - but not spectacular - medium-term returns.
Folks on Twitter don't seem to like the market's prospects, either, especially in small-caps. Bearish messages have outnumbered bullish ones 2-to-1 over the past few sessions.
There has also been a distinct increase in volume in inverse ETFs, accounting for more than 0.8% of NYSE volume over the past week.
Traders have preferred ETFs generally, especially the most liquid ones, versus individual stocks. We see this "liquidity premium" most often when traders are extremely anxious.
Climbing On Board
More and more ETF traders have been moving into gold to take advantage of its perceived haven. An average of more than $200 million per day has flowed into GLD over the past week. Gold bugs gotta hope that this is different than most other times over its history.
The Optimism Index on GLD has soared to an average of nearly 90% over the past 3 sessions. It's been hard for the metal to sustain this kind of intense interest for long.
The longer-term Optimism Index on gold itself has climbed to one of the highest readings since the market peaked in 2012.
As always, if the market can continue higher virtually unabated after readings like this, it strongly suggests something fundamental has changed. We've already seen some signs of that over the past couple of months.
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Futures a deeper red now than the open
https://www.finviz.com/futures.ashx
CNBC
U.S. stock futures were pointing to a lower open ahead of the Friday session, after a three-day rally that saw the S&P 500 and Nasdaq erase Monday's sharp losses. The Dow, S&P 500, and Nasdaq all registered their biggest one-day gains since early June, as worries over a China currency devaluation and falling global yields subsided. (CNBC)
* The yield curve everyone's worried about is inches away from flashing a recession signal (CNBC)
* Cramer says a 'set of bogus worries' spooked investors out of stocks this week (CNBC)
China's central bank today set the official midpoint reference for the yuan at 7.0136 per dollar, the weakest level since April 3, 2008 but stronger than what analysts were expecting. It's the second time this week that the People's Bank of China set the daily benchmark at a weaker level than the psychologically important 7-yuan-per-dollar. (CNBC)
Uber (UBER) shares are down about 8% in premarket trading, after the company delivered disappointing second-quarter results. It was a miss on both top and bottom lines for Uber. Net losses for the ride-hailing company soared to $5.24 billion, largely owing to stock based compensation. (CNBC)
* Uber's Q2 losses were bigger than total 2018 losses for all but three S&P 500 companies (CNBC)
Goldman Sachs (GS) is casting a wide net for customers of its new credit card with Apple (AAPL), approving some subprime borrowers for the product. The bank, which is in charge of deciding who gets the Apple Card, is accepting some applications from users with less-than-stellar credit scores, according to people with knowledge of the matter. (CNBC)
On Friday's economic and earnings calendars, the government is out with the July producer price index at 8:30 a.m. ET. Meanwhile, E.W. Scripps (SSP), PG&E (PCG), and Tribune Media (TRCO) report quarterly earnings this morning. There are no companies of note scheduled to report after today's closing bell.
IN THE NEWS TODAY
Malaysia filed criminal charges today against 17 current and former directors at subsidiaries of Goldman Sachs following an investigation into a multi-billion-dollar corruption scandal that led to the demise of state fund 1MDB. The U.S. bank has been under scrutiny for its role in helping to raise $6.5 billion through bond offerings. (Reuters)
Huawei has launched its own operating system, HarmonyOS, said the CEO of the Chinese tech giant's consumer division. It's part of Huawei's play in the so-called Internet of Things, which refers to devices connected to the internet. (CNBC)
Chipmaker Broadcom (AVGO) formally announced its acquisition of Symantec's (SYMC) enterprise business after the closing bell on Thursday. Broadcom is paying $10.7 billion in cash, according to a statement. (CNBC)
J.C. Penney is at risk of delisting from the New York Stock Exchange after shares of the department store chain traded under $1 for a period of 30 consecutive business days. Shares of the department store chain have plunged more than 70% over the past year. (CNBC)
Beyond Meat (BYND) abandoned plans to enter the Japanese market, according to Reuters quoting Japan trading house Mitsui & Co, although a future expansion is possible. Mitsui has a small stake in the plant-based burger maker, but said a joint venture plan is no longer in the works.
Amarin (AMRN) said the Food and Drug Administration will hold an advisory committee meeting on whether labeling for the company's' heart disease drug Vascepa should be expanded. Amarin wants an expanded label to reflect upbeat results from clinical trials, but the scheduling of that meeting means a three-month delay in a final decision. (Stat)
STOCKS TO WATCH
CBS (CBS) beat Wall Street estimates with adjusted quarterly profit and revenue. Results were boosted by strong ad sales for the March NCAA men's basketball tournament, as well as an increase in content licensing and distribution fees.
Activision Blizzard (ATVI) beat estimates with adjusted quarterly profit, and the videogame publisher's revenue also came in slightly above expectations. Activision also raised its full-year outlook, with the company saying key franchises like "Call of Duty" are showing momentum.
Dropbox (DBX) also beat analysts' forecasts in its fiscal quarter. The cloud storage company saw paying users rise by 14% compared to a year ago, although revenue per user fell below Street forecasts.
Yelp (YELP) beat estimates by 4 cents with quarterly profit of 16 cents per share, while the online review site operator's revenue was essentially in line with analyst forecasts. Yelp said a change in its operations is allowing it to expand sales without having to add to its sales force.
Farfetch (FTCH) posted smaller-than-expected losses than Wall Street expected. Farfetch, a technology platform provider for the luxury fashion industry, also saw revenue beat estimates, but lowered its full-year guidance for a key growth metric. Separately, Farfetch announced the acquisition of luxury brand platform maker New Guards Group for $675 million. Shares of Farfetch were losing about third of their value in the premarket.
Money managers Reduced their exposure to the US Equity markets since last week...
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NAAIM Exposure Index
* August 7, 2019
The NAAIM Number
56.59
Last Quarter Average
77.30
»»» Read More…
Click on "In reply to", to see The NAAIM Number from prior weeks
$KHC My Earnings play was a win- KHC closed down 8.58% in regular session after reporting this morning. I added to my short in after hours session tonight.
Share price recovered in the afternoon after being down 13% on back of the broad market which was very strong rebounding today, short covering by day players and too early bottom fishers.
There is presently nothing to hope for with KHC. They've neglected the businesses so long it'll be hard to ketchup. Long money is 90 day dead money and many opportunities missed.
Downgrades coming.
Good night all!
MG
PS Not recommending shorting here. I was just gilding the lily with my add tonight
CNBC
* Goldman downgrades Caterpillar, citing weakness in China business due to trade war (CNBC)
China's central bank set the official reference rate for the Chinese currency at 7.0039 yuan per dollar today, the weakest level since April 21, 2008. Investors are watching the currency closely after it went above the 7-yuan-per-dollar level on Monday. That prompted the U.S. Treasury Department to label Beijing a currency manipulator. (CNBC)
* China's exports unexpectedly rise in July but more US tariffs may weigh on trade (CNBC)
On today's economic calendar, the government issues its initial jobless claims report at 8:30 a.m. ET. Later, at 10 a.m. ET, wholesale inventories for June are released. Meanwhile, Kraft Heinz (KHC) and Viacom (VIAB) are out with quarterly earnings this morning, while CBS (CBS), Uber (UBER), and Yelp (YELP) issue their numbers after this afternoon's closing bell. (CNBC)
IAC/InterActiveCorp (IAC) is considering distributing its stakes in Match Group (MTCH) and ANGI Homeservices (ANGI) to shareholders. Shares of dating powerhouse Match closed about 25% higher Wednesday. Shares of IAC were up about 10%. ANGI shares were lower. The internet holding company also posted strong revenue. (CNBC)
STOCKS TO WATCH
Roku (ROKU) reported smaller-than-anticipated losses while also beating revenue estimates. The video streaming device maker added 1.4 million net new accounts during the quarter. The stock was jumping about 13% in the premarket.
Lyft (LYFT) lost 68 cents per share for the second quarter, less than half the loss predicted by analysts. The ride-hailing service's revenue came in well above estimates, as active riders increased by 41% compared to a year earlier.
Advanced Micro Devices (AMD) released its newest chip for data centers and said it won Alphabet's (GOOGL) Google unit and Twitter (TWTR) as customers for the chip.
Symantec (SYMC) is near a deal to sell its enterprise unit to chip maker Broadcom (AVGO), reported the Wall Street Journal. The division could be valued at about $10 billion, according to people familiar with the matter.
CONTRIBUTORS
Jessica Bursztynsky
@jbursz
Peter Schacknow
@peterschack
ROKU Amazing- made $10.64 a share overnight buying after earnings!
FedEx Put Options Active After Amazon Breakup
By: Schaeffer's Investment Research | August 7, 2019
• Some traders are attempting to capitalize on pricey FDX puts
• FDX stock is eyeing familiar support after confirming plans to split with AMZN
Along with broad-market selling pressure, FedEx Corporation (NYSE:FDX) stock is feeling the heat today, after the delivery concern confirmed it will end its ground-delivery contract with Amazon.com (AMZN). The FAANG giant has been building its own delivery network, and FedEx in June warned that ending the duo's partnership will weigh on fiscal 2020 earnings. At last check, FDX shares are 1.6% lower at $158.56, and put options are trading at an accelerated clip.
FedEx stock is now testing familiar support in the $150-$155 area, which contained the security's fourth-quarter sell-off and acted as a floor in June and July. Rebound attempts in 2019, meanwhile, were halted by round-number resistance in the $200 area.
So far today, FDX has seen nearly 6,600 puts cross the tape -- about 50% more than its average intraday put volume. The equity's 30-day at-the-money (ATM) implied volatility (IV) of 34.2% is in the 85th percentile of its annual range, pointing to relatively inflated volatility expectations being priced into near-term options. Meanwhile, its 30-day ATM IV skew of 17.2% sits in the 85th percentile of its annual range. This means that FDX puts have been more expensive relative to their call counterparts, from an IV standpoint, only 15% of the time during the past year.
That said, it looks like some traders are attempting to capitalize on relatively pricey FedEx puts today, selling to open the October 145 put -- the most active option thus far. By writing the puts to open, the speculators expect FDX shares to remain north of $145 through the close on Friday, Oct. 18, when the options expire. In this best-case scenario, the puts will remain out of the money and expire worthless, allowing the sellers to retain the entire premium received at initiation.
Prior to today, options traders were upping the bullish ante on FDX via call options. On the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), investors bought to open more than two calls for every put on the stock during the past two weeks. The resulting 10-day call/put volume ratio of 2.30 is in the 88th percentile of its annual range, pointing to a much healthier-than-usual appetite for long calls over puts of late.
Elsewhere, despite the delivery stock's struggles on the charts of late, analysts also remain optimistic toward FDX. The security boasts 10 "buy" or better endorsements, compared to six lukewarm "holds" and only one "sell" rating. Should the security extend its August slide -- and potentially take out support in the $150-$155 neighborhood -- a round of analyst downgrades could exacerbate selling pressure on the shares.
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ROKU Got in after hours on a good beat
Hope WW doesn't stand for wallet weight loss :)
Thanks for your input, bg
I looked at buying some puts but they were pretty expensive, so you could well be right.
Buy the Dip on These 2 Blue Chips
By: Schaeffer's Investment Research | August 7, 2019
• Both stocks have struggled with the broad market sell-off lately
• Visa and Microsoft have pulled back to historically bullish trendlines
The two best Dow stocks in 2019 have been Visa Inc (NYSE:V) and Microsoft Corporation (NASDAQ:MSFT). However, the blue chips have not been immune to the broad-market sell-off in recent weeks. The good news is that these pullbacks could be short-lived, if history is any indicator.
Looking at Visa first, the equity has crept back to its 80-day moving average, after a lengthy period above it, defined for this study as being above the trendline 60% of the time in the last two months, and eight of the previous 10 trading days. Schaeffer's Senior Quantitative Analyst Rocky White notes that the eight previous run-ins with the 80-day have resulted in an average one-month gain of 4.6%, with six of the eight returns positive.
From its current perch at $173.29, a pop of similar magnitude would put Visa stock around $180, just south of its July 29 record high of $184.07. This would also fill the bear gap from Monday's sell-off, which saw V breach its 80-day trendline on a closing basis for the first time since late January.
Options traders have focused on puts lately. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), V's 10-day put/call volume ratio of 1.25 ranks 3 percentage points from an annual high. This indicates the rate of put buying relative to call buying has been quite accelerated the past two weeks.
Microsoft stock has also pulled back to its 80-day moving average. According to White, 11 similar meet-ups from recent years have yielded an average one-month gain of 6.4%, with 10 of the 11 returns positive. Trading at $134.69 at last check, a move higher of similar magnitude puts MSFT at $143, barreling past its July 26 all-time high of $141.68. Year-to-date, the tech titan is up 32%.
Microsoft calls are all the rage right now. ISE/CBOE/PHLX data shows that 144,354 calls changed hands the last 10 days, compared to 67,650 puts. The resultant call/put volume ratio ranks in the elevated 73rd annual percentile, meaning not only that calls have doubled puts in the past two weeks, but the rate of call buying relative to put buying has been quicker than usual.
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CNBC
U.S. stock futures were pointing to modest gains at the Wall Street open, in contrast to Monday's sharp sell-off and Tuesday's strong rebound. Dow futures were under a bit of pressure today, largely due to Walt Disney's (DIS) drop after a big quarterly earnings miss. The S&P 500 and Nasdaq broke six-day losing streaks with their Tuesday gains. The Dow was up for the first time in five sessions. (CNBC)
* 10-year Treasury yield hits October 2016 lows as bonds rally on trade concerns (CNBC)
China's central bank set the official midpoint reference for the yuan at 6.9996 stronger than 7 per dollar today two days after Washington labeled Beijing a currency manipulator. The yuan has been weakening in recent months, especially as the trade war between the U.S. and China intensified. (CNBC)
Bridgewater Associates' Ray Dalio urged investors to have bets on "both horses" in the U.S.-China trade dispute. The founder of the world's largest hedge fund argued that investors still have a historic opportunity to buy into China as it opens up its markets to foreign investments. (CNBC)
Shares of Walt Disney (DIS) were falling about 4% in premarket trading after the media conglomerate late Tuesday missed estimates with earnings and revenue. Disney said the integration of the $70 billion in assets acquired from the former 21<sup>st</sup> Century Fox was responsible for the miss. (CNBC)
On today's earnings calendar, CVS Health (CVS), and Wendy's (WEN) are out with quarterly results before the stock market opens. This afternoon's after-the-bell list includes numbers from Fox (FOXA), Roku (ROKU), Lyft (LYFT), TripAdvisor (TRIP), and Zillow Group (ZG). (CNBC)
Homeowners rushed to take advantage of a sizable drop in mortgage interest rates last week, with refinance applications surging 12%, a stunning 116% improvement over the year-ago period. Last week, total mortgage application volume rose 5.3%, according to the Mortgage Bankers Association. (CNBC)
IN THE NEWS TODAY
The U.S. National Highway Traffic Safety Administration has pulled Tesla (TSLA) up on claims regarding the safety of its Model 3 sedan. NHTSA Chief Counsel Jonathan Morrison sent Tesla CEO Elon Musk a cease-and-desist letter last year to say it had become aware of "misleading statements" made by the company about the vehicle's safety rating. (CNBC)
Democratic Sens. Edward Markey and Richard Blumenthal have written to Facebook (FB), questioning whether there was a "worrying pattern" of poor privacy protection for children using its Messenger Kids app. The app, launched in December 2017, is designed for users under the age of 13. (Reuters)
* Twitter says it may have used user data for ads without permission (Reuters)
As Amazon (AMZN) bolsters its PillPack business to take on the prescription drug market, industry stalwarts CVS (CVS) and Walgreens (WBA) are vigorously defending their turf, setting up a protracted battle between the old guard and the new. The two companies say PillPack is requesting transfers of prescriptions for patients who haven't provided consent. (CNBC)
Walgreens (WBA) plans to shutter 200 stores in the U.S. as the company pares back its locations in the U.K. The new store closures represent less than 3% of its 10,000 locations in the U.S., Walgreens said in a statement, adding that it anticipates "minimal disruption to customers and patients. (CNBC)
The Food and Drug Administration is threatening to take criminal action against Novartis (NOVN), saying the drugmaker used data it knew was inaccurate in its application for a $2.1 million gene therapy that was approved in May. The agency said the gene therapy should remain on the market, even while it's still assessing the situation. (CNBC)
Problems with British Airways' IT systems left thousands of passengers facing flight cancellations and delays at airports in the airline's third major computer failure in a little more than two years. Today's woes are the latest in a string of problems at the airline, which is also smarting from a $230 million fine this month for a huge customer data breach. (Reuters)
STOCKS TO WATCH
Weight Watchers (WW) reported mixed quarter earnings, though the weight-loss company raised its full year forecast as it sees upbeat member recruitment trends. The stock was jumping more than 25% in premarket trading.
Match Group (MTCH) reported better-than-expected results for its second quarter. The dating service operator also raised its full-year forecast. Match's performance was helped in part by strong subscriber growth at its Tinder service. The stock was soaring 18% in the premarket.
Wynn Resorts (WYNN) matched forecasts with adjusted quarterly earnings, and the casino operator's revenue came in slightly above analyst estimates. The company said strength in Macau and upbeat hotel revenue in Las Vegas helped drive results.
Papa John's (PZZA) missed forecasts for adjusted quarterly profit, although the pizza chain's revenue came in above estimates. Papa John's is also forecasting a loss of 10 to 40 cents per share for 2019, compared to prior estimates of breakeven to a 50 cents per share profit.
Hertz Global (HTZ) smashed expectations of its adjusted quarterly profit. The car rental company also saw revenue come in above Wall Street forecasts, rising to a record high. Hertz said its bottom line was also helped by productivity improvements.
CONTRIBUTORS
Jessica Bursztynsky
@jbursz
Peter Schacknow
@peterschack
Analyst Sees 85% Upside for This Pharma Stock
By: Schaeffer's Investment Research | August 6, 2019
• Cantor Fitzgerald said the firm is a leader in an "underappreciated field"
• ARVN scored a fresh "overweight" rating from Cantor Fitzgerald
The shares of biopharmaceutical concern Arvinas Inc (NASDAQ:ARVN) took a spill -- along with most of the stock market -- yesterday, as traders panned the company's quarterly earnings report. However, analysts at Cantor Fitzgerald aren't worried, initiating coverage of ARVN stock with an "overweight" rating and $42 price target -- nearly double yesterday's close of $22.75.
The analysts said Arvinas "is a leader in [the] underappreciated field of targeted protein degradation," and upcoming clinical data releases could be a boon for the shares. More specifically, Cantor waxed optimistic on the company's PROTAC platform, which "could emerge as a game-changing new modality," as well as its ARV-110 treatment, which could have "blockbuster potential in prostate cancer."
Since touching a record low of $10.19 on Dec. 21, ARVN stock has more than doubled, embarking on a series of higher highs and lows. The equity ultimately peaked at $28.25 on July 26, before pulling back to test its 80-day moving average. At last check, the shares were up 3.9% to trade at $23.64 -- a roughly 50% premium to ARVN's September initial public offering (IPO) price of $16.
Should the security extend its quest for higher highs, a short squeeze could certainly add fuel to the fire. Short interest shot 21% higher during the past two reporting periods, and now accounts for more than 6% of ARVN's total available float. At the equity's average pace of trading, it would take shorts nearly a week to buy back their bearish bets.
In addition, there's room on the bullish bandwagon for more analysts. The current consensus 12-month price target on Arvinas shares is just $25.25 -- representing a slim 5.9% premium to the stock's current perch. Should the pharma stock resume its recent journey to all-time highs, a batch of price-target hikes could lure more buyers to the table.
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SHAK 2nd add 85.62
Was too early on this one
Will work out
SHAK 1st add to short at 83.32
Must be a squeeze going on..
SHAK Short @ 81.94.
82.15 now
Hope I want it
CNBC
U.S.stock futures were pointing to a higher Wall Street open ahead of the Tuesday session, something that may have seemed highly unlikely after Dow futures fell more than 600 points in early trading last night. Nonetheless, stocks are coming off their largest one-day losses of 2019, with the Dow riding a five-day losing streak and the S&P 500 and Nasdaq down for six days in a row. The Nasdaq's losing streak is its longest since November 2016.
* Jim Cramer says to think before you sell: 'It's not 2009' (CNBC)
The U.S. Treasury Department designated China as a currency manipulator, a historic move that no White House had exercised since the Clinton administration. The formal designation came after China allowed its currency to breach a psychological level. Meanwhile, China's state newspaper Tuesday accused the United States of "deliberately destroying international order."(CNBC)
* China fires biggest warning shot yet in trade war and now it's up to Trump to decide how far to go (CNBC)
* China sets its currency midpoint stronger today, at a level below the 7-yuan-per-dollar level (CNBC)
On today's economic calendar, the Labor Department's Job Opportunities and Labor Turnover Survey, or JOLTS, is out at 10 a.m. ET. On the earnings front, Blue Apron (APRN) and Mallinckrodt (MNK) are among the companies issuing quarterly results this morning. Dow stock Walt Disney (DIS) leads today's after-the-bell list. Earnings from Match Group (MTCH), Papa John's (PZZA), and Weight Watchers (WW) are also out this afternoon.
* Former Fed chairs Volcker, Greenspan, Bernanke and Yellen call for independent central bank (CNBC)
IN THE NEWS TODAY
President Donald Trump imposed a freeze on all Venezuelan government assets in the U.S., sharply escalating an economic and diplomatic pressure campaign aimed at removing socialist President Nicolas Maduro from power. The action bans U.S. companies from dealings with the Venezuela government. (Reuters)
Ten U.S. senators are calling on Alphabet (GOOGL) to take "immediate action" to convert its growing number of contractors to full-time employees after six months of work. The demand follows reports that said Google employed 121,000 contract employees and 102,000 full-time employees, with contractors making significantly less. (CNBC)
* Tesla has started a new anti-fraud department, according to a recent job listing (CNBC)
After months of anticipation, Apple (AAPL) has invited some select customers to apply for its Apple Card. Apple CEO Tim Cook previously said during its third quarter earnings call that the new credit card, released in partnership with Goldman Sachs (GS), would be released in August. (CNBC)
Boston-based online security start-up Cybereason said today it raised $200 million in new funds from Japan's SoftBank and its affiliates. That brings the total amount of funds the start-up raised to $400 million since it was founded in 2012. Other backers include Lockheed Martin, CRV and Spark Capital. (CNBC)
* Tencent in talks to buy stake in Universal Music Group (WSJ)
Local media company New Media (NEWM) will buy USA Today-owner Gannett (GCI) in a $1.4 billion deal, creating the biggest newspaper owner in the United States as publishers struggle with readers shifting to online sources for news. New Media and Gannett are the largest U.S. newspaper owners by circulation. (Reuters)
STOCKS TO WATCH
Shake Shack (SHAK) beat Wall Street forecasts of adjusted quarterly profit and revenue. Same-restaurant sales were up, and the company also raised its full-year forecast as digital sales rise.
Marriott (MAR) matched forecasts with its adjusted quarterly profit, though the hotel chain's revenue missed estimates. Marriott also cut its full-year forecast for the key revenue-per-available-room metric, as weakening business travel impacts results.
Take-Two Interactive (TTWO) soared above expectations of adjusted quarterly profit. The video game maker saw revenue beat estimates as well, and raised its full-year forecast amid ongoing success of its "Red Dead Redemption" and "Grand Theft Auto" franchises.
Avis Budget (CAR) reported mixed earnings on Wall Street. The bottom line was helped by a reduction in expenses as well as its partnerships with Lyft (LYFT) and Alphabet's (GOOGL) Waymo self-driving unit.
Blackstone Group (BX) is taking a 10% to 15% stake in private equity firm BC Partners for about $560 million, according to the Wall Street Journal. The deal could be announced as soon as today.
CONTRIBUTORS
Jessica Bursztynsky
@jbursz
Peter Schacknow
@peterschack
ALLK I covered for $5.37/share profit (or +7.47%) on an overnight hold.
Position was too small and tying up too much cash @ 200% margin to screw around with it.
Nicee, though!
MG
No, I didn't suffer at all, TH. Thanks for asking.
My overall account was up 2.44%, today.
I have 4 shorts and 2 longs for open positions
I try always to check that I have shorts on before I end morning trading and go out and make sales calls in the afternoon
MG
https://www.facebook.com/571339063055570/videos/408988789854823/
Present Positions
ALLK
(Short)
ARQL
(Short)
DVA
(Short)
KHC
(Short)
LEVI
RCMT
(reprinted from another board)
ALLK I'm up $6.62 a share at this point, Larry but ALLK announced a $200M shelf after hours so should slid even more tomorrow.
Fidelity frustrated me with its 200% cash requirement. What a nanny company- handcuffing me from spending my own cash.
When I have time I'm gonna open an account at Interactive Brokers.
After that, I rushed out and made a sales call. Talking to the buyer like I just came from a fire. I was trading all day, lol
Getting an order and that's all that counts :)
Thanks for following.
MG
Bull Durham
(reprinted from another board)
ALLK 23 x's 90 DAV
Boys are playing ALLK today
ALLK Shorted at 71.88
dangerous bio
Nanny Fidelity has a 200% requirement
CNBC
U.S. stock futures were pointing to a sharply lower open on Wall Street, which would extend losses for stocks following the worst week of 2019 for the S&P 500 and Nasdaq. Losses today's close would give the S&P 500 its longest losing streak since last October, while the Nasdaq would have its longest skid since November 2016. Today's indicated drop comes as China allows its currency to slide to its lowest level in more than a decade, with no solution in sight to the U.S.-China trade dispute. (CNBC)
The Chinese currency crossed the closely watched seven-yuan-for-a-dollar barrier today after another escalation in the trade war between Beijing and Washington. The sharp weakening in the Chinese currency came after President Donald Trump unexpectedly announced fresh tariffs on China last week, which are set to take effect on Sept. 1. (CNBC)
* 10-year Treasury yield falls to nearly three-year low as investors flee to safer assets (CNBC)
* Bitcoin surges past $11,000 as global stocks dive on trade worries (CNBC)
Trump overruled the adamant objections of nearly his entire trade team when he ordered the upcoming imposition of 10% tariffs on China's remaining $300 billion of exports to the U.S. Only Peter Navarro, a China hawk, did not object. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer were in Shanghai last week in an effort to restart stalled trade talks. (WSJ)
On today's light U.S. economic calendar, the Institute for Supply Management releases its non-manufacturing index for July at 10 a.m. ET. Meanwhile, Tyson Foods (TSN) is among the few companies releasing earnings this morning. Avis Budget (CAR), Caesars Entertainment (CZR), Marriott (MAR), Shake Shack (SHAK), and Take-Two Interactive (TTWO) are out with their quarterly numbers after today's closing bell. (CNBC)
IN THE NEWS TODAY
Facebook (FB) plans to rebrand Instagram to "Instagram from Facebook" and WhatsApp to "WhatsApp from Facebook" to make it clearer they are owned by the tech giant, Time reported. Currently, the FTC is investigating whether the social media company has monopoly powers.
* Justice Department, FTC skirmish over antitrust turf (WSJ)
U.S. broadcaster Fox (FOXA) agreed to buy Credible Labs Inc (CRD) in a deal valuing the online finance broker at $397 million, as the Murdoch-controlled firm hunts for growth following the sale of its film and TV assets to Disney (DIS). (Reuters)
CVS Health (CVS) has a plan to win over millennials and it looks a lot like Amazon Prime: free home delivery of products from shampoo to cold medicine, all for an annual membership fee of $48. CVS' CarePass program goes nationwide today. (CNBC)
Sales of Huawei's smartphones are soaring in China due to a patriotic buying spree to help ease the impact of widening U.S. restrictions on the tech firm. Huawei's smartphone sales in China rose to a record 38% in its second quarter. (WSJ)
* Longstanding economic frustration is fueling Hong Kong's protests, expert says (CNBC)
HSBC, Europe's largest bank by assets, is planning to cut thousands of jobs after the surprise announcement of Chief Executive Officer John Flint's departure. Up to 2% of the bank's 237,685 employees are facing job layoffs and will target senior roles. (CNBC)
London's Heathrow Airport, the busiest in Europe, has cancelled 172 flights today and tomorrow due to a strike plans by thousands of workers. Members of their union overwhelmingly rejected the airports 7.3% pay increase offer. (AP)
STOCKS TO WATCH
Berkshire Hathaway (BRK.B) missed estimates of its profit and revenue. Warren Buffett's company was hurt by weaker results at insurer Geico and lower cargo volumes at Berkshire's BNSFT rail operation.
J.P. Morgan Chase (JPM) will lead an upcoming debt offering by The We Company, parent of workspace provider WeWork. Reuters reports that this puts JPMorgan in position to lead an initial public offering for WeWork later this year.
Uber Technologies (UBER) is unlikely to be successful in its attempt to get a new five-year license from London's transport regulator, according to a Sky News report. Uber is said to be expecting its application to result in another short term
Sohu (SOHU) reported an adjusted second quarter loss of $1.27 per share, wider than the loss of $1.11 per share anticipated by Wall Street analysts. The China-based internet firm also saw revenue come in below forecasts, with a drop in brand advertising revenue pressuring results.
CONTRIBUTORS
Jessica Bursztynsky
@jbursz
Peter Schacknow
@peterschack
Is the Stock Market Cheap?
By: Jill Mislinski | August 3, 2019
Here is the latest update of a popular market valuation method using the most recent Standard & Poor's "as reported" earnings and earnings estimates and the index monthly average of daily closes for the past month. For the earnings, see the table below created from Standard & Poor's latest earnings spreadsheet.
• TTM P/E ratio = 22.0
• P/E10 ratio = 30.0
The Valuation Thesis
A standard way to investigate market valuation is to study the historic Price-to-Earnings (P/E) ratio using reported earnings for the trailing twelve months (TTM). Proponents of this approach ignore forward estimates because they are often based on wishful thinking, erroneous assumptions, and analyst bias.
TTM P/E Ratio
The "price" part of the P/E calculation is available in real time on TV and the Internet. The "earnings" part, however, is more difficult to find. The authoritative source is the Standard & Poor's website, where the latest numbers are posted on the earnings page.
The table here shows the TTM earnings based on "as reported" earnings and a combination of "as reported" earnings and Standard & Poor's estimates for "as reported" earnings for the next few quarters. The values for the months between are linear interpolations from the quarterly numbers.
The average P/E ratio since the 1870's has been about 16.8. But the disconnect between price and TTM earnings during much of 2009 was so extreme that the P/E ratio was in triple digits — as high as the 120s — in the Spring of 2009. In 1999, a few months before the top of the Tech Bubble, the conventional P/E ratio hit 34. It peaked close to 47 two years after the market topped out.
As these examples illustrate, in times of critical importance, the conventional P/E ratio often lags the index to the point of being useless as a value indicator. "Why the lag?" you may wonder. "How can the P/E be at a record high after the price has fallen so far?" The explanation is simple. Earnings fell faster than price. In fact, the negative earnings of 2008 Q4 (-$23.25) is something that had never happened before in the history of the S&P 500.
Let's look at a chart to illustrate the unsuitability of the TTM P/E as a consistent indicator of market valuation.
The P/E10 Ratio
Legendary economist and value investor Benjamin Graham noticed the same bizarre P/E behavior during the Roaring Twenties and subsequent market crash. Graham collaborated with David Dodd to devise a more accurate way to calculate the market's value, which they discussed in their 1934 classic book, Security Analysis. They attributed the illogical P/E ratios to temporary and sometimes extreme fluctuations in the business cycle. Their solution was to divide the price by a multi-year average of earnings and suggested 5, 7 or 10-years. In recent years, Yale professor and Nobel laureate Robert Shiller, the author of Irrational Exuberance, has popularized the concept to a wider audience of investors and has selected the 10-year average of "real" (inflation-adjusted) earnings as the denominator. Shiller refers to this ratio as the Cyclically Adjusted Price Earnings Ratio, abbreviated as CAPE, or the more precise P/E10, which is our preferred abbreviation.
The Correlation between Stocks and Their P/E10
As the chart below illustrates, the P/E10 closely tracks the real (inflation-adjusted) price of the S&P Composite. In fact, the detrended correlation between the two since 1881, the year when the first decade of average earnings is available, is 0.9977. (Note: A perfect positive correlation would be 1 and the absence of correlation would be 0).
The historic P/E10 average is 16.9. After dropping to 13.3 in March 2009, the ratio rebounded to a high of 23.5 in February of 2011 and then hovered in the 20-to-21 range. It began rising again in late 2013 and is currently at 30.0.
Of course, the historic P/E10 has never flat-lined on the average. On the contrary, over the long haul it swings dramatically between the over- and under-valued ranges. If we look at the major peaks and troughs in the P/E10, we see that the high during the Tech Bubble was the all-time high above 44 in December 1999. The 1929 high of 32.6 comes in at a distant second. The secular bottoms in 1921, 1932, 1942 and 1982 saw P/E10 ratios in the single digits.
The chart also includes a regression trendline through the P/E10 ratio for the edification of anyone who believes the price-earnings ratio has naturally tended higher over time as markets evolve. The latest ratio is 50% above trend, up from 46% above last month.
Where does the current valuation put us?
For a more precise view of how today's P/E10 relates to the past, our chart includes horizontal bands to divide the monthly valuations into quintiles — five groups, each with 20% of the total. Ratios in the top 20% suggest a highly overvalued market, the bottom 20% a highly undervalued market. What can we learn from this analysis? The Financial Crisis of 2008 triggered an accelerated decline toward value territory, with the ratio dropping to the upper second quintile (from the bottom) in March 2009. The price rebound since the 2009 low pushed the ratio back into the top quintile, hovered around that boundary and has now moved higher.
A cautionary observation is that when the P/E10 has fallen from the top to the second quintile, it has eventually declined to the lowest quintile and bottomed in single digits. Based on the latest 10-year earnings average, to reach a P/E10 in the high single digits would require an S&P 500 price decline below 900. Of course, a happier alternative would be for corporate earnings to continue their strong and prolonged surge. If the 2009 trough was not a P/E10 bottom, when might we see it occur? These secular declines have ranged in length from over 19 years to as few as three.
Percentile Analysis
We can also use a percentile analysis to put today's market valuation in the historical context. As the chart below illustrates, latest P/E10 ratio is approximately at about the 95th percentile of this series.
Deviation from the Mean
Here is a pair of charts illustrating the historic P/E 10 ratio from its mean (average) and geometric mean with callouts for peaks and troughs along with the latest values.
Relative to the mean, the market remains quite expensive, with the ratio approximately 77% above its arithmetic mean and91% above its geometric mean.
The Longest Bull Market?...
March 2009 marked the beginning of the longest secular bull market in history if we use conventional measures (failure of a 20%+ decline following a similar gain). It has been over 10 years since the Lehman Brothers crisis and the market could still be charging upwards even with recent corrections. Check out this infographic from FINRA on the longest bull markets.
Read Full Story »»»
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