CAPIS Morning Note – 01/02/24: Morning Selloff Starts The Year Lower

Overnight Summary: The S&P 500 closed Friday lower by -0.28% at 4769.83 from Thursday higher by 0.04% at 4783.35. The overnight high was hit at 4828 at 3:40 a.m. EST while the low was hit at 4796.50 at 6:20 a.m. EST. The range overnight was 32 points as of 6:20 a.m. EST. The 10-day average…

Overnight Summary: The S&P 500 closed Friday lower by -0.28% at 4769.83 from Thursday higher by 0.04% at 4783.35. The overnight high was hit at 4828 at 3:40 a.m. EST while the low was hit at 4796.50 at 6:20 a.m. EST. The range overnight was 32 points as of 6:20 a.m. EST. The 10-day average of the overnight range is at 16.10 from15.10.  The average for May-November average was 21.43 from 22.06. Currently, the S&P 500 is lower by -22.25 at 6:25 a.m. EST.  

Executive Summary: Welcome to 2024, the Year of the Rabbit. We are indeed off to a fast start but right now it is on the downside.

Earnings Out After The Close: 

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

Capital Raises:

  • IPOs Priced or News:
    • Electric Scooter IPO to Test Enthusiasm for India’s EV Story. (WSJ)
  • New SPACs launched/News:
    • GRIID Infrastructure and Adit EdTech Acquisition Corp. (ADEX) Complete Business Combination.
    • Iron Horse Acquisitions Corp. (IROHU) Announces Closing of Initial Public Offering.
  • Secondaries Priced: None of note.
  • Notes Priced of note: None of note.
  • Common Stock filings/Notes:
    • ATLC: Entered into $50 million At-The-Market Sales Agreement.
    • CGTX: Filed Form S-3.. 6,030,532 Shares of Common Stock.
    • IGC: Filed Form S-3.. $100,000,00 Common Stock Warrants Unit Rights.
    • LXRX: Form 8K.. entered into an Open Market Sale Agreement.
    • PALI: Form S-1 Filed shares of Common Stock.
    • XPON: Filed Form 8K.. entered into that certain securities purchase agreement.
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • DUOT: Filed Form S-1.. 2,500,000 Shares of Common Stock Offered by Selling Stockholders.
    • FTHM: Filed Form S-3..Up to 4,402,761 Shares of Common Stock Offered by the Selling Shareholder — $100 Million Mixed Shelf.
    • MLNK: See Mixed Shelf.
    • RPTX: Establishes automatic securities disposition plans; up to 929,670 common shares in the aggregate may be sold by executive officers.
  • Private Placement of Public Entity (PIPE):
    • ADTX: $6 Million Private Placement Priced At-The-Market under Nasdaq Rules.
  • Mixed Shelf Offerings:
    • ABAT: Files for $150 million mixed securities shelf offering.
    • AUR: Files $850 million mixed shelf securities offering.
    • BLRX: Files $250 million mixed shelf securities offering.
    • CYBN: Filed Form F-10.. $400,000,000 Mixed Shelf.
    • DUOT: See Selling Shareholder.
    • HLLY: Files $200 million mixed shelf securities offering.
    • MLNK: Files for $500 million mixed securities shelf offering; also files for 57,252,193 share common stock offering by selling shareholders.
    • PGEN: Files for $300 million mixed securities shelf offering.
  • Debt/Credit Filing and Notes:
    • GLP:  Announces Private Offering of Senior Notes.
  • Tender Offer: None of note.
  • Convertible Offering & Notes Filed:
    • DISH Network ( DISH) Convertible Notes Become Convertible Into Shares of EchoStar Corporation (SATS).
    • EQT: Redeems outstanding 1.75% convertible senior notes due 2026.
    • HLX: Announces its 6.75% convertible senior notes due 2026 will remain convertible.
    • OBLG: Filed Form S-3.. 3,830,417 Shares Of Common Stock Underlying Warrants To Purchase Common Stock – 9,000,000 Shares Of Common Stock Underlying Shares Of Series F 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 Weekend:

  • Weekly Wrap Up: Best and Worst performing large cap stocks:
    • Trading Up: CYTK 91.4%, SBNY 70.6%, CHRS 67.1%, POL 37.2%, ESPR 27.3%, UBX 19.2%, SATS 18.0%, LXRX 16.8%.
    • Trading Down: MBI -57.1%, EBIX -47.2%, DERM -27.6%, NEO -22.1%, BPT -12.8%, TELL -9.9%, OMER -9.4%, SUPV -9.2%, GFI -8.6%, TK -8.1%, SPH -8.0%, LOPE -7.2%, EHTH -7.2%, PRTA -6.8%, AAOI -6.8%, SNBR -6.7%.
  • News Items After the Close:
    • Nasdaq (NDAQ) Beats NYSE in IPO Race for Fifth Year in a Row. (WSJ)
    • RTX awarded a $344.6 million modification to previously awarded US Air Force contract.
  • News Items Over the Weekend:
    • President Xi Jinping said on Sunday that China will consolidate and enhance the positive trend of its economic recovery in 2024, and sustain long-term economic development with deeper reforms.
    • China Injects $50 Billion Into Policy Banks In Financing Push. (Bloomberg)
    • Meet America’s Newest Oil Trader Extraordinaire: Joe Biden. (WSJ)
    • Wedbush: QQQ We believe tech stocks will be up 25% in 2024 with a NASDAQ 20k level our bull case scenario as the Street is still significantly under estimating how quickly this AI monetization cycle is playing out among enterprises in the field. Dec quarter end checks strong for cloud. (Dan Ives)
    • U.S. Navy helicopters fire at Yemen’s Houthi rebels and kill several in latest Red Sea shipping attack. (CNBC)
    • Iran Deploys Warship To Red Sea Following US Navy Attack On Houthis. (Al Jazeera)
    • AAPL: Apple Vision Pro will be available in the US on January 27, 2024.
      • AAPL downgraded to SELL @ Barclays  on ‘lackluster’ iPhone sales.
    • USGS reported 7.6 magnitude earthquake 4 miles from Suzu, Ishikawa, Japan on Monday; tsunami warning was issued; over 40 deaths reported.
    • Barron’s:
      • Positive View: RILY, FSR, BYND, NVAX, CYNA, AI, TRUP, UPST, BMEA, ULCC, AMLP, KYN, NEE, T, VZ, XLU,AMD, TSM, CALX, CIEN, TMUS, TTD 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:
    • American Strategic Investment Co. (NYC) Announces Changes to Board of Directors.
    • Cano Health (CANO) Receives NYSE Notice of Non-Compliance with Market Capitalization Criteria.
    • CNH Industrial (CNHI) completes Voluntary Delisting of Shares from Euronext Milan and begins Single Listing on the New York Stock Exchange.
    • GigCapital5, Inc. (GIA) Announces Stockholder Approval of Extension Amendment to the Amended and Restated Certificate of Incorporation and Investment Management Trust Agreement.
    • GOGL: Appoints Lars-Christian Svensen as the CEO of Golden Ocean Management AS.
    • H World Group (HTHT) CFO Ms. Jihong He will step down.
    • Li-Cycle (LICY) Receives Continued Listing Standard Notice from NYSE.
    • MaxCyte (MXCT) appoints Maher Masoud as President, Chief Executive Officer and Director.
    • NuZee, Inc. (NUZE) Announces Delay in Filing Form 10-K.
    • Pintec Technology (PT) appoints Xin Yang as CFO.
    • RGS to transfer listing from NYSE to Nasdaq.
    • Richtech Robotics (RR) to delay 10-K filing.
    • Sagimet Biosciences (SGMT) CFO Anthony Rimac to step down.
    • Wrap Technologies (WRAP) names Jared Novick as COO, effective immediately.
    • Zhihu (ZH) Announces Receipt of NYSE Notification Regarding ADS Trading Price Requirement.
  • Buyback Announcements or News:
    • Alibaba (BABA) provides repurchase update; has $11.7 bln remaining under share repurchase program as of Dec 31, 2023.
    • Cibus Global (CBUS) entered into $80 million Sales Agreement with Stifel, Nicolaus & Company.
    • VinFast Auto (VFS) entered into a securities purchase agreement.
    • XOMA authorizes its first stock repurchase program, up to $50 million.
  • Stock Splits or News:
    • KTTA 1/20 and TBLT 1/65 reverse split stocks today.
  • Dividends Announcements or News:
    • Watsco (WSO) Declares $2.45 Quarterly Dividend and Commemorates Paying Dividends for 50 Consecutive Years.
  • Insider Sales Of Note: None of note.

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

S&P 500 -34, Dow Jones -204,  NASDAQ -191, and Russell 2000 -17.  (as of 7:57 a.m. EST).  Asia is higher ex Japan while Europe is lower this morning ex Germany. VIX Futures are at 14.23 from 13.98 this morning.  Gold and Silver are higher with Copper 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 3.946% from 3.883% from yesterday. The U.S. Dollar is higher versus the Euro, higher versus the Pound and higher against the Yen. Bitcoin is at $45,473 from $42,793 higher by +4.00% this morning.

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

  • Daily Positive Sectors: None of note.
  • Daily Negative Sectors: Real Estate, Consumer Cyclical, Basic Materials, Technology of note.
  • One Month Winners: Real Estate, Industrials, and Basic Materials Consumer Cyclicals, Financials of note.
  • Three Month Winners: Technology, Real Estate, and Industrials, Consumer Cyclicals and Materials of note.
  • Six Month Winners: Communication Services, Financial, Technology, Energy and Consumer Cyclical of note.
  • Twelve Month Winners: Technology, Communication Services, Consumer Cyclicals and Industrials of note.
  • Year to Date Winners:  Technology, Communication Services, and Consumer Cyclical, Industrials and Financials of note.

Stocks fell slightly on Friday, but the S&P 500 closed out 2023 with a surprising gain of 24% as inflation slowed, the economy remained strong and the Federal Reserve signaled an end to its rate-hiking campaign.  The S&P 500 rose for nine straight weeks to end the year, its best win streak since 2004. Big Tech stocks lifted the Nasdaq Composite to its best year since 2020 on AI enthusiasm.  The broad index fell 0.28% to settle at 4,769.83, with a 24.2% gain for the year. The S&P 500 ends 2023 just short of a new all-time high. At one point on Friday, it climbed within 9 points, or less than 0.2%, from its record close of 4,796.56 attained in January 2022.  The Dow Jones Industrial Average lost 20.56 points, or 0.05%, to close at 37,689.54 on Friday. It finished the year with a 13.7% gain and notched a new record during 2023. The Nasdaq Composite edged down 0.56% to 15,011.35 for the session, but rose 43.4% for its best year since 2020.  (CNBC – 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: None of note.
  • 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.

Company Earnings Guidance:

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

Erlanger Research Advance/Decline Chart:

Gap Ups & Down In Early Pre-Market:

  • Gap Up: LBPH +10%, PGEN +6% of note.
  • Gap Down: CORT -31%, YY -11%, MDXG -6%, LI -5%, LXRX -4%, PNM -4% of note.

Insider Action: No stock 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.

  • What You Need To Know To Start Your Day. (Bloomberg)
  • 5 Things To Know Before the Stock Market Opens on Wednesday. (CNBC)
  • Bloomberg Lead Story: U.S. Pressured Netherlands to Block China Bound Chip Machinery.  (Bloomberg)
  • Bloomberg Second Most Shared Story: Iran sends warship to Red Sea after U.S. sinks Houti boats.  (Bloomberg)
  • NASDAQ Futures drop -1%, Bond yields rise after rally: Market Wrap. (Bloomberg)
  • BYD set to beat Telsa (TSLA) again after selling 3 million cars in 2023. (CNBC)
  • The latest DealBook from The New York Times. (NYT)
  • Bloomberg The Big Take: Mattel (MAT) bets big on Barbie’s pink carpet debut.  (Podcast)
  • NPR Marketplace:  Oil rich Permian Basin attracts buyers with resources. (Podcast)
  • NY Times Daily: Trump’s 2024 Playbook. (Podcast)
  • BBC Global News Daily Podcast: Israel Supreme Court strikes down judicial reforms. (Podcast)
  • Wealthion: 2024 Predictions from Steven Feldman and Anthony Scaramucci. (Podcast)

Moving Average Update:

  • Score sees some new red in short term Moving Averages.  Goes from 100% to 82%.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the Presidential Daily Briefing, 9:00 a.m. EST
    • The President and The First Lady depart St. Croix, U.S. Virgin Islands en route to Joint Base Andrews (6:45 PM Local), 5:45 p.m. EST
    • The President and The First Lady depart Joint Base Andrews en route to the White House, 9:45 p.m. EST
    • The President and The First Lady arrive at the White House, 9:55 p.m. EST

Economic:

  • S&P Global Manufacturing PMI Final 945 a.m. EST
  • November Construction Spending is due out at 10:00 a.m. EST and is expected to remain at 0.6% for a second month.
  • 3,6-Month Bill Auction 1130 a.m. EST

Federal Reserve / Treasury Speakers: None of note.

M&A Activity and News: None of note.

Meeting & Conferences of Note:

  • Sellside Conferences: None of note.
      • Previously posted and ongoing conferences: None of note.
  • Top Shareholder Meetings: IMAQ, MBTC
  • Fireside Chat: None of note.
  • Investor/Analyst Day/Calls: None of note.
  • Update: None of note.
  • R&D Day: None of note.
  • Company Event: None of note.
  • Industry Meetings: None of note.
    • Previously posted and ongoing conferences: None 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: