CAPIS Morning Note – 09/18/23: Stocks Turn Lower In Last Hour, As Friday Weakness Continues

Overnight Summary: The S&P 500 closed Friday lower by -1.22% at 4450.32 from Thursday higher by 0.84% at 4505.10. The overnight high was hit at 4507.50 at 3:35 a.m. EDT while the low was hit at 4498.50 at 6:05 a.m. EDT. The range overnight was 9 points. The 10-day average of the overnight range is at…

Overnight Summary: The S&P 500 closed Friday lower by -1.22% at 4450.32 from Thursday higher by 0.84% at 4505.10. The overnight high was hit at 4507.50 at 3:35 a.m. EDT while the low was hit at 4498.50 at 6:05 a.m. EDT. The range overnight was 9 points. The 10-day average of the overnight range is at 19.50 from 20  down from a peak of 31.50 on 8/15.  The average for May-August average was 21.10 from 18.81 in May through July and the August average was 26.21. Currently, the S&P 500 is higher by 4.50 points which is 0.10% at  7:10 a.m. EDT.

Earnings Out After The Close: 

  • Beats: None of note.
  • Flat: None of note.
  • Misses: None of note.

Unusual Options Activity:

Daily Screen in Erlanger Chartroom that highlights unusual Call and Put Options activity in the S&P 500.  It looks for volume outliers relative to the Open interest in Calls or puts.  Usually, the stock price activity reflects the outlier situation (earnings/buyout/announcement), but once in a while, you can uncover stocks prior to a pop or drop.

  

Capital Raises:

  • IPOs Priced or News:
    • Klaviyo (KVYO) expected to raise IPO target to $557 million.
  • New SPACs launched/News:
    • Sagaliam Acquisition Corp. (SAGA) Announces Execution Of Definitive Business Combination Agreement And Receipt Of Nasdaq Listing Delinquency Letter.
  • Secondaries Priced: None of note.
  • Notes Priced of note: None of note.
  • Common Stock filings/Notes:
    • ADTX: Filed Form S-1.. Up to 2,060,000 shares of Common Stock.
    • MSGE: Announces Secondary Offering and Share Repurchase.
    • SEEL: Filed Form S-3.. 5,000,000 Shares of Common Stock.
    • TKO: Filed Form S-1.. Class A Common Stock 29,373,139 Shares.
    • VIRI: Announces Termination of At-The-Market Sales Agreement.
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • AGYS: Files for 1,735,457 share common stock offering by selling shareholder.
    • JILL: Filed Form S-3.. Up to 6,000,000 Shares of Common Stock Offered by J.Jill, Inc. and Up to 8,465,444 Shares of Common Stock Offered by Selling Stockholder.
  • Private Placement of Public Entity (PIPE): None of note.
  • Mixed Shelf Offerings:
    • CHWY: Filed Form S-3ASR – Mixed Shelf Offering.
    • LIDR: Launches $200 Million mixed shelf offering – filing.
  • Debt/Credit Filing and Notes:
    • NCR: Announce Offering of Senior Secured Notes.
  • Tender Offer: None of note.
  • Convertible Offering & Notes Filed:
    • TTNP: Announces $9.5 Million Private Placement of Convertible Preferred Stock.

Capital Raise Summary From The TradeXchange, bringing traders and investors real time news and Squawk Box, and other sources.

News After The Close and Over the Week:

  • Weekly Wrap Up: Best and Worst performing large cap stocks:
    • Trading Up: RCKT 50.1%, CGC 46.0%, CARA 23.4%, GLT 20.0%, TWNK 18.8%, BB 18.3%, IAG 17.4%, CECO 15.7%, MAG 15.2%, EAF 15.1%, CASY 15.1%, AMRC 14.4%, REVG 14.3%, NXE 14.1%, PBI 13.9%.
    • Trading Down: PTCT -36.3%, OFIX -29.3%, EVLO -25.2%, TUP -20.7%, SFIX -19.0%, AAOI -16.5%, PLNT -15.0%, EBS -15.0%, UIS -14.2%, NVAX -13.9%, ALLK -13.1%, FTCH -13.1%, CMTL -12.5%, FATE -12.5%, DOCU -12.4%, IOVA -12.2%.
  • News Items After the Close:
    • General Motors (GM) Says It Expects To Run Out Of Parts At Kansas Plant As Soon As Next Week Because Of Missouri Plant Strike.
    • F announced it’s laying off 600 employees in Michigan (CNBC)
    • Disney (DIS) Chief Information Officer Departs. (WSJ)
    • Lockheed Martin (LMT) awarded a $196.5 million US Navy contract.
    • General Dynamics (GD) awarded a US Navy not-to-exceed $517.2 million delivery order.
  • News Items Over the Weekend:
    • The Tech Trade Is Showing Cracks. Higher Rates for Longer Spell More Trouble. (WSJ)
    • Federal Reserve Chair Jerome Powell could still hammer U.S. stocks on Wednesday even if the Fed doesn’t hike interest rates. (MarketWatch)
    • AAPL: iPhone 15 pre-orders began this Friday and so far (as of Sunday pm) are tracking much stronger than we and the Street expected and up roughly 10%-12% from iPhone 14 based on our analysis. The mix is heavily skewed towards iPhone 15 Pro/Pro Max with Pro Max front and center.  (IVES Wedbush)
    • Cheaper Airfares Are Squeezing Airline Stocks. (WSJ)
    • Barron’s:
      • Positive View: MRCY of note.
      • Cautious View: None of note.
      • Mixed View: None of note.
  • Erlanger Type 1 Short Squeezes and Type 4 Long Squeezes reporting earnings this week:

  • Exchange/Listing/Company Reorg and Personnel News:
    • Benson Hill (BHIL) Receives Continued Listing Standard Notice From NYSE.
    • Black Diamond Therapeutics (BDTX) announces CEO transition.
    • Blink Charging (BLNK) disclosed Friday that it was notified of the amicable departure of Mark Pastrone, the Company’s Chief Operating Officer.
    • DocGo (DCGO) disclosed on Friday that Anthony Capone resigned as the Chief Executive Officer.
    • Five Point Holdings, LLC (FPH) Announces Appointment of Kim Tobler as Chief Financial Officer.
    • ImmunoGen (IMGN) Appoints Lauren White as Senior Vice President and Chief Financial Officer.
    • Jianzhi Education Technology Group Company Limited (JZ) Receives Nasdaq Notification Regarding Minimum Bid Price Deficiency.
    • Korea Electric Power Corp (KEP) shareholders elected Kim, Dong-Cheol as the President & CEO.
    • NaaS Technology Inc. (NAAS) Joins NASDAQ Golden Dragon China Index.
    • Polished.com Inc. (POL) Announces Notification of NYSE American Continued Listing Deficiency.
    • Verve Therapeutics (VERV )appoints Frederick T. Fiedorek, M.D., as Chief Medical Officer.
  • Buyback Announcements or News:
    • CNH Industrial (CNHI): Periodic Report on $300 Million Buyback Program.
    • Valero Energy (VLO) announces $2.5 bln share repurchase authorization.
  • Stock Splits or News:
    • Rubicon Technologies (RBT) Announces 1-for-8 Reverse Stock Split.
  • Dividends Announcements or News:
    • ArrowMark Financial Corp. (BANX) Announces Long Term Capital Gain Distribution of $0.42 Per Share.
  • Insider Sales Of Note: None of note.

What’s Happening This Morning: Futures value reflects the change with fair value.

S&P 500 -11 , Dow Jones -55,  NASDAQ -62, and Russell 2000 -4.  (as of 7:49 a.m. EDT).  Asia is lower ex Japan and Europe are lower this morning ex the FTSE is it awaits the ECB Decision. VIX Futures are at 15.76 from 15.12  yesterday.  Gold and Silver are higher while Copper is lower this morning. WTI Crude Oil and Brent Crude Oil are higher with Natural Gas higher as well. US 10-year Treasury sees yields at 4.339% from 4.324%  yesterday. The U.S. Dollar is lower versus the Euro, lower versus the Pound and lower against the Yen. Bitcoin is at $27,179 from $26,633 Friday, higher by  2.50%.

Sector Action – (1/3/6/12/YTD Updated Weekly with Monday release):  

  • Daily Positive Sectors: None of note.
  • Daily Negative Sectors: Technology, Consumer Cyclical, Energy, Communication Services, Consumer Defensive of note.
  • One Month Winners: Energy, Communication Services, and Consumer Cyclical, Technology  of note.
  • Three Month Winners: Energy, Communication Services, and Financial, Consumer Cyclical of note.
  • Six Month Winners: Communication Services, Energy, Technology, Consumer Cyclical of note.
  • Twelve Month Winners: Technology, Communication Services, and Industrial, Energy of note.
  • Year to Date Winners:  Communication Services, Technology, Consumer Cyclical of note.

A slump in technology companies weighed on the broader market Friday, chipping away at major indexes’ gains and pushing them into negative territory for the week. The S&P 500 fell 1.2%, while the Nasdaq Composite shed 1.6%. The Dow Jones Industrial Average lost 289 points, or 0.8%. The S&P 500 and Nasdaq posted slim declines for the week, while the Dow eked out a small gain.  Stocks opened lower and the losses accelerated midday, with major indexes ending the day near session lows. Tech stocks, the market’s stars this year, were some of the worst performers. The S&P 500’s information technology sector lost almost 2%, dragging the broad stock-market gauge into the red for the week. (WSJ – edited by QPI)

Upcoming Earnings Of Note: (From Chartroom Software – sorted by market cap, highest to lowest with most visible names)

  • Monday After the Close:

  • Tuesday Before the Open:

Earnings of Note This Morning:

  • Beats: None of note.
  • Flat: None of note.
  • Misses: None of note.
  • Still to Report: None of note.

Guidance:

  • Positive Guidance: LEN of note.
  • Negative Guidance: None of note.

Erlanger Research Advance/Decline Chart:

Gap Ups & Down In Early Pre-Market:

  • Gap Up: None of note.
  • Gap Down: None of note.

Insider Action: GABC, PII sees Insider buying with dumb short selling.  No stock sees Insider buying with smart short sellers.

Rags & Mags: Repeated stories from prior days never listed, i.e. “rehashed news”. Sorted by Global, U.S. and stock specific.

  • 5 Things to Know Before the Stock Market Opens. (CNBC)
  • 5 Things You Need to Know to Start Your Day. (Bloomberg) 
  • Bloomberg Lead Story: How Auto Executives Misread the UAW Ahead of Historic Strike. (Bloomberg)
  • Bloomberg  Second Most Shared Story: Xi’s Security Obsession Turns Ordinary Citizens Into Spy Hunters. (Bloomberg)
  • US Shutdown looms (Reuters)
  • House Republicans release short term bill to avert government strike until 10/31. (CNBC)
  • Hedge funds just turned bullish on Dollar before Key Fed Meeting. (Bloomberg)
  • Hedge Fund Manager Ray Dalio warns of “great disruptions” ahead. (CNBC)
  • BMO to halt auto lending. (Reuters)
  • NPR Morning Report Marketplace: Have smartphones peaked? (Podcast)
  • BBC Global News:  Migrant Crisis in Europe. (Podcast) 
  • NY Times The Daily: Ozempic era of weight loss, two different results. (Podcast)
  • Bloomberg: India flexes its growing global power. (Podcast)
  • Wealthion: Market highs by year end? (Podcast)

Moving Average Update:

  • Score dive bombs to 25% from 85%.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the Presidential Daily Briefing, 9:30 a.m. EDT
    • The President participates in a campaign reception, 6:15 p.m. EDT
    • The President and The First Lady participate in a campaign reception, 7:30 p.m. EDT

Economic:

  • The September NAHB Housing Index is due out at 10:00 a.m. EDT and is expected to remain at 50.
  • Treasury International Capital 4:00 p.m. EDT

Federal Reserve / Treasury Speakers: None of note.

M&A Activity and News: None of note.

Meeting & Conferences of Note:

Top Tier Sell-side Upgrades & Downgrades:

The recommendations listed below in this “Upgrade/Downgrade” section are compiled from what we believe are Tier I, II and III firms. Recommendations posted are taken from a variety of sources each day and we only post upgrades or significant initiations as well as downgrades to underweight or sell. The purpose of this posting is to make the reader aware of market-moving recommendations. None of these recommendations should be interpreted as actual recommendations from CAPIS or its employees.

Today’s Upgrades and Downgrades:

Previous Day’s Upgrades and Downgrades: