CAPIS Morning Note – 01/09/23: Stocks Seek To Extend Friday Rally

Overnight Summary: The S&P 500 closed Friday higher by 2.28% at 3895.08 from Thursday lower by -1.16% at 3808.10.  The overnight high of 3934.25 was hit at 5:30 a.m. EST. The low was hit at 3916.50 at 3:05 a.m. EST, a range of ~18 points high to low.  At 7:25 a.m. EST, the S&P 500…

Overnight Summary: The S&P 500 closed Friday higher by 2.28% at 3895.08 from Thursday lower by -1.16% at 3808.10.  The overnight high of 3934.25 was hit at 5:30 a.m. EST. The low was hit at 3916.50 at 3:05 a.m. EST, a range of ~18 points high to low.  At 7:25 a.m. EST, the S&P 500 (mini) was +15.50.

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.  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: None of note.
  • New SPACs launched/News:
    • IG Acquisition Corp. (IGAC) will dissolve and liquidate on Jan 11.
    • TZP Strategies Acquisition Corp. (TZPS) will redeem its Public Shares and will not consummate an initial business combination.
  • Secondaries Priced:
    • OPGN: Announces Pricing of $7.5 Million Public Offering.
  • Notes Priced of note: None of note.
  • Common Stock filings/Notes:
    • ATHA: Filed Form 424B5..Up to $75,000,000 Common Stock.
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • SUM: Filed Form S-3ASR – Class A Common Stock offering by selling shareholders.
  • Private Placement of Public Entity (PIPE): None of note.
  • Mixed Shelf Offerings:
    • BCAB: Filed Form s-3.. $200,000,000 Mixed Shelf Offering.
    • CRGY: Filed Form S-3.. $700,000,000 Mixed Shelf Offering.
    • EQ: Filed Form S-3.. $250Million Mixed Shelf.
  • Debt Filing/Notes:
    • Live Nation (LYV) intends to offer $850.0 million in aggregate principal amount of convertible senior notes due 2029.
    • Transocean Ltd. (RIG) Announces Proposed Private Offering of $500 Million of Secured Notes Due 2028
  • Tender Offer: None of note.
  • Convertible Offering & Notes Filed: None of note.

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: AUPH 76%, CTMX 57%, NVCR 49%, ADAP 48%, DCPH 32%, CONN 30%, TOUR 26%, LX 26%, MTRX 26%, FIXX 25%, CPS 25%, OMER 25%, COLL 24%, STAA 24%, FGEN 23%, RGS 23%.
    • Trading Down: FATE -58%, BBBY -48%, ANAB -25%, RIGL -17%, KLXE -16%, MGNX -15%, CACC -15%, TUSK -15%, VET -15%, ALLK -15%, SM -15%, GBX -14%, MDB -14%, LPG -14%, BEAT -13%, DOMO -13%, IMGN -12%.
  • News Items After the Close:
    • Tech stocks soar as investors weigh signs of wage growth easing. (MarketWatch)
    • Rep Kevin McCarthy (R-CA) was elected House speaker, narrowly prevailing in 15th round of voting. (MarketWatch)
    • Macy’s (M) stock slides as holiday lulls weigh on sales forecast and execs predict difficulties into 2023. (MarketWatch)
    • American Airlines (AAL) pilots raise concerns over new cockpit protocols.
    • Salesforce (CRM) co-CEO Marc Benioff hints at more potential layoffs after this week’s job cuts. (CNBC)
  • News Items Over the Weekend:
    • Stocks that Defined the Week:  AMZN, TSLA, SI, WBA, CAG, BBBY, WWE (WSJ)
    • The Week in Business: Slowing Job Growth (NYT)
    • China Reopens To The World As International Travel Restrictions End. (WSJ)
    • Jack Ma is giving up controlling rights of Ant Group Co., as the billionaire further retreats from his online empire following the country’s unprecedented tech crackdown. (Bloomberg)
    • White House Says Congress Will Have To Raise U.S. Debt Limit, Without Conditions.
    • GE’s (GE) Spinoff (GEHC) Deserves Healthy Skepticism. (WSJ)
    •  Barron’s:
      • Positive View: TSLA, MRK, LLY, GEHC, SCHW of note.
      • Cautious View: PFE 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:
    • CureVac (CVAC) Appoints Alexander Zehnder as CEO From April 1, 2023.
    • Flora Growth (FLGC) Receives Additional 180 Day Extension by Nasdaq to Regain Compliance with Minimum Bid Price Rule.
    • GoldMining Inc. (GLDG) appoints David Garofalo as a director and co-Chair of the Company.
    • Harmony Biosciences (HRMY) Appoints Jeffrey M. Dayno, Md As Interim Ceo And Expands Role Of Jeff Aronin To Executive Chairman.
    • Health Catalyst (HCAT) announces that COO Paul Horstmeier will transition to role of senior advisor.
    • Hope Bancorp (HOPE) announces resignation of CFO, effective January 6, 2023, in order to pursue other opportunities.
    • Mitek Systems (MITK) CFO Frank Teruel tendered his resignation.
    • National Energy Services Reunited Corp. (NESR) Announces Receipt of Additional Determination Letter from Nasdaq.
    • NuCana (NCNA) Announces Receipt of NASDAQ Notice.
    • NYMOX (NYMX) Appeals Deficiency Letter.
    • Regional Health Properties (RHE) Receives Notice of Non-Compliance From NYSE American.
    • Rite Aid Corporation (RAD) Names Elizabeth “Busy” Burr Interim Chief Executive Officer.
    • The Beauty Health Company (SKIN) promotes EVP of Sales (Americas), Daniel Watson, to the position of Chief Revenue Officer.
  • Buyback Announcements or News:
    • Brookfield Asset Mgmt (BAM) announces establishment of normal course issuer bid.
    • Seabridge Gold (SA) announces agreement for at-the-market offering that would result in aggregate gross proceeds to the Company of up to US$100 million.
  • Stock Splits or News:
    • CANF trading r/s price.
  • Dividends Announcements or News: None of note.

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

S&P 500 +17, Dow Jones +116,  NASDAQ +57,  and Russell 2000 +9. (as of 7:56 a.m. EST).  Asian markets are higher.  Europe markets are trading higher ex the FTSE. VIX Futures are at 22.14 from 22.77 yesterday.  Gold, Silver and Copper higher.  WTI Crude Oil and Brent are higher with Natural Gas higher as well. $ barely down. US 10-year Treasury sees yields at 3.589% from 3.729% yesterday. The U.S. Dollar is lower versus the Euro, lower versus the Pound and higher against the Yen. Bitcoin is at $17,240 from $16,724 yesterday higher by 1.63%.

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

  • Daily Positive Sectors: Basic Materials, Technology, Real Estate, Industrials, Consumer Defensive, Financial, Utilities of note.
  • Daily Negative Sectors: none of note.
  • One Month Winners:  Financial, Basic Materials, Industrials of note.
  • Three Month Winners: Basic Materials, Industrials, and Consumer Defensive Energy of note.
  • Six Month Winners: Industrials, Energy, and Basic Materials of note.
  • Twelve Month Winners: Energy and Utilities of note.
  • Year to Date Winners: Basic Materials, Consumer Cyclical, and Financial Energy of note.

The Dow Jones Industrial Average rallied about 700 points on Friday after fresh data showed a slowdown in wage growth, an upbeat sign for the Federal Reserve’s battle against inflation that could ease pressure for further interest-rate increases.  The Dow rose 700.53 points, or 2.1%, to 33630.61. The broad-based S&P 500 climbed 86.98, or 2.3%, to 3895.08. The technology-heavy Nasdaq Composite advanced 264.05, or 2.6%, to 10569.29.  The day’s rally put all three major U.S. stock indexes in positive territory for the first week of 2023. All three rose about 1% or more for the week.  The Labor Department’s monthly jobs report showed that employers added 223,000 jobs in December, the smallest gain in two years but more than the 200,000 expected by economists. The ability of U.S. companies to keep hiring shows that the job market has held up even as the Fed’s rate increases have sparked worries about a potential recession.(WSJ)

Click here for a video explanation of Erlanger Value Lines.

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

  • Monday After the Close: WDFC, PSMT, AZZ, ACCD of note.
  • Tuesday Before the Open: SNX, BBBY of note.

Earnings of Note This Morning:

  • Beats: AYI +0.27, CMC +0.24 of note.
  • Flat: None of note.
  • Misses: TLRY (0.01).
  • Still to Report: None of note.

Guidance:

  • Positive Guidance: OCUL, QDEL, NSTG, EXAS, HOLX, AKYA, RXST, VRAY, NVRO, EWCZ, PFGC, ANF, CDNA, NVTA of note.
  • Negative Guidance: ABBV, ESPR, IRWD, LULU, LTH, TVTX, STAA of note.

Erlanger Research Advance/Decline Chart: 

Gap Ups & Down In Early Pre-Market:

  • Gap Up: CINC +140%, AMYT +109%, ALBO +92%, DAWN +27%, CVAC +24%, PHAT +22%, OCGN +20%, VRDN +8%, CBAY +8%, RVNC +5%, HOLX +5%, MRUS +5%, ANNX +4%, LQDA +4% of note.
  • Gap Down: LULU -11%, ESPR -6%, M -6%, KSS -5%, IDYA -5%, MOLN -5%, HRMY -5%, BILI -4% of note.

Insider Action: FULC sees Insider buying with dumb short selling.  COIN 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 Monday (CNBC)
  • 5 Things You Need to Know to Start Your Day. (Bloomberg)
  • Bloomberg Lead Story: Goldman Sachs to Cut 3,2000 Jobs After Cost Review.  (Bloomberg)
  • Bloomberg Most Read Story: Goldman Sachs to Cut 3,2000 Jobs After Cost Review. (Bloomberg)
  • Brazil set to slide as pro-Bolsonaro riots take place. (CNBC)
  • China removes all border restrictions. (WSJ)
  • President Biden to delay replenishment of the Strategic Petroleum Reserve. (Bloomberg)
  • Morgan Stanley warns of 22% U.S. stock slump. (Bloomberg)

Moving Average Update:

  • Score sees massive snap back up to 65% from 3%.

Geopolitical: 

  • President’s Public Schedule:
    • The President and The First Lady depart en route the National Palace, 4:55 p.m. EST
    • The President and The First Lady participate in an official welcome ceremony hosted by President Andres Manuel Lopez Obrador and Dr. Beatriz Gutiérrez Müller of Mexico, 5:15 p.m. EST
    • The President participates in a bilateral meeting with President Andres Manuel Lopez Obrador, 6:00 p.m. EST
    • The President and The First Lady participate in a trilateral dinner with President Andres Manuel Lopez Obrador, Dr. Beatriz Gutiérrez Müller, Prime Minister Justin Trudeau of Canada, and Mrs. Sophie Grégoire Trudeau, 7:45 p.m. EST

Economic: 

  • Investor Movement Index  12:30 p.m. EST
  • Consumer Credit 3:00 p.m. EST

Federal Reserve / Treasury Speakers:

  • Federal Research Atlanta President Raphael Bostic 12:30 p.m. EST
  • Federal Reserve San Francisco President Mary Daly 12:30 p.m. EST
  • Schedule of FOMC meetings for 2023
    • Jan/Feb: 31st-1st
    • March: 21st-22nd
    • May: 2nd-3rd
    • June: 13th-14th
    • July: 25th-26th
    • September: 19th-20th
    • Oct/Nov: 31st-1st
    • December: 12th-13th

M&A Activity:

  • CinCor Pharma (CINC) to be Acquired by AstraZeneca.
  • Vista Equity To Buy Duck Creek (DCT) For $19 per share cash deal ($2.6 billion).

Meeting & Conferences of Note:

  • Sellside Conferences:
    • Bank of America New Year Software Bus Tour
    • Capital One Securities 3rd Annual REIT Conference 2023 (01/09/23-01/10/23)
    • Citi Emerging Europe Conference 2023 (01/09/23-01/10/23)
    • H.C. Wainwright Biotech Conference 2023 (01/09/23-01/13/23)
    • JP Morgan 41st Annual Healthcare Conference 2023 (01/09/23-01/12/23)
    • Morgan Stanley BioPharma Physician Expert Day
    • Needham 25th Annual Growth Conference 2023 (01/09/23-01/12/23)
    • RBC Canadian Bank CEO Conference (01/09/23-01/10/23)
    • UBS Winter Infrastructure & Energy Conference (01/09/23-01/11/23)
    • UBS Greater China Conference 2023 January Main conference (01/09/23-01/12/23)
    • Wolfe Real Estate Outlook Conference
      • Previously posted and ongoing conferences:
        • None of note.
  • Company Meetings: BRAC, FWBI.
  • Fireside Chat: None of note.
  • Investor/Analyst Day/Calls: ASRT, ARWR, ATHX, IMUX, STRO.
  • Update: None of note.
  • R&D Day:
  • Company Event:
    • Alliance for Regenerative Medicine(R)s 2023 Cell & Gene State of the industry Briefing with Krystal Biotech (KRYS).
  • Industry Meetings:

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 it 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: