CAPIS Morning Note – 05/26/23: Let’s Make a Deal Joe! Stocks Think There Could Be A Deal.

Overnight Summary: The S&P 500 closed Thursday at 4151.28 higher by 0.88% from Wednesday at 4115.24 lower by -0.73%. The overnight high of 4169.25 was hit at 7:05 a.m. EDT. The low was hit at 4146 at 9:30 p.m. EDT, a range of ~25 points high to low which is a mid-vol night.  At 7:15…

Overnight Summary: The S&P 500 closed Thursday at 4151.28 higher by 0.88% from Wednesday at 4115.24 lower by -0.73%. The overnight high of 4169.25 was hit at 7:05 a.m. EDT. The low was hit at 4146 at 9:30 p.m. EDT, a range of ~25 points high to low which is a mid-vol night.  At 7:15 a.m. EDT, the current price was 4167.50 which is 0.19% and 7.75 points. The 10-day average of the overnight range is 21.30 from 21.10.

Short Interest Update: Top Increases for NYSE and NASDAQ Jumps in Shares Short.

Earnings Out After The Close: 

  • Beats: DECK +0.77, LGF.A +0.31, WDAY +0.19, GPS +0.17, RH +0.14, COST +0.12, ULTA +0.05, MRVL +0.02, ME +0.01 of note
  • Flat: DOMO of note.
  • Misses: ADSK (0.01) 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:
    • Atmus Filtration Technologies (ATMU) Prices 14,124,409 share IPO at $19.50 per share, at the mid-point of the $18-21 expected range.
  • New SPACs launched/News:
    • Beard Energy Transition Acquisition Corp (BRD) announces stockholder approval of proposals in connection with extending the date by which BRD may consummate a business combination.
  • Secondaries Priced:
    • TCRX: 22.3 Million shares and warrants offering priced at $2 per share.
  • Notes Priced of note:
    • TLRY: Prices offering of $150 million of 5.20% Convertible Senior Notes due 2027.
  • Common Stock filings/Notes:
    • CELU: Filed Form S-3.. Up to 32,086,487 Shares of Class A Common Stock Including up to 15,195,786 shares issuable upon exercise of warrants.
    • SBFM: Filed Form S-3.. 17,857,143 Shares of Common Stock.
    • TCRX: Launch of Proposed Public Offering. (MS and Wedbush bookmanagers)
  • Direct Offering: None of note.
  • Selling Shareholders of note:
    • OUT: Files for 28,856,239 shares of common stock by selling shareholders.
  • Private Placement of Public Entity (PIPE):
    • VVY: Successfully Completes Private Placement Raising EUR 25 Million.
  • Mixed Shelf Offerings:
    • CREX: Filed Form S-3. $46,168,698 Mixed Shelf.
    • EXAS: Filed Form S-3ASR. Mixed Shelf.
  • Debt/Credit Filing and Notes:
    • APTO: Enters into $25 Million Committed Equity Facility.
    • BGCP: Completes Offering of $350.0 Million of 8.000% Senior Notes.
    • CVS: Filed Form S-3ASR.. DEBT SECURITIES.
    • TCOM: Announces Repurchase Right Notification for 1.50% Exchangeable Senior Notes due 2027.
    • TLRY: Proposed Registered Offering of $150 Million of Convertible Senior Notes. (MarketWatch)
  • Tender Offer:
    • MAX: MediaAlpha: White Mountains (WTM) and subsidiary WM Hinson commenced cash tender offer to purchase up to 5 mln shares of Class A Common Stock of MediaAlpha at $10 per share.
  • 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:

  • After Hours: 
    • Trading Up: MRVL +18%, GPS +14%, PDSB +13%, WDAY +8%, GNLX +6%, CUE +6%,  PARA +5%, CGEM +5% of note.
    • Trading Down: TLRY -19%, ULTA -7%, HMST -4% of note.
  • News After The Close:
    • Stocks making the biggest moves after hours: GPS, MRVL, RH, ULTA, COST, WDAY (CNBC)
    • JPMorgan (JPM) to reportedly cut 1,000 First Republic jobs as integration begins.
    • Paramount Global (PARA) Controlling Shareholder Gets $125 Million Investment. (WSJ)
    • Ford (F) CEO And Elon Musk (TSLA) To Host Twitter Spaces On EV Adoption.
    • Tesla (TSLA) Model Y is now the world’s best-selling car, first EV to do so. (electrek)
    • Costco (COST) results miss expectations, as U.S. same-store sales decline. (MarketWatch)
    • Ulta Beauty (ULTA) shares fall after same-store sales miss. (MarketWatch)
    • Gap Inc. (GPS) shares soar 15% after retailer reports margin improvement. (CNBC)
    • RH stock declines after earnings beat, mixed outlook. (MarketWatch)
    • NYC Banking Commission votes to halt city deposits at Capital One, KeyBank. (MarketWatch)
    • Twitter’s new CEO Linda Yaccarino pushed NBCUniversal to buy the social network years ago: sources (NYPOST)
  • Exchange/Listing/Company Reorg and Personnel News:
    • Index Changes:
      • DOLE Set to Join Russell 3000® and Russell 2000® Indexes.
      • Knife River (KNF) set to join S&P MidCap 400.
      • Bank of Hawaii (BOH) to join S&P SmallCap 600.
      • Evolution Petroleum (EPM) Set to Join Russell 2000(R) and Russell 3000(R) Indexes.
    • Aridis Pharmaceuticals (ARDS) Receives Nasdaq Notice on Late Filing of its Form 10-Q.
    • Fox Factory Holding Corp. (FOXF) Welcomes New Chief Financial Officer.
    • Invitae (NVTA) announces CFO transition and selection of Christine Gorjanc as Interim CFO.
    • Lazard (LAZ) Appoints Peter R. Orszag as CEO and Kenneth M. Jacobs as Executive Chairman.
    • Royal Gold (RGLD) COO Mark Isto to retire.
    • Talaris Therapeutics (TALS) Announces Leadership Transition.
    • Virios Therapeutics (VIRI) Regains Compliance with Nasdaq Minimum Bid Price Requirement.
    • VMware (VMW) announces that Karen Dykstra will take on role as CFO.
    • Unico American Corporation (UNAM) Receives Notification from Nasdaq Related to Delayed Quarterly Report on Form 10-Q.
    • White Mountains (WTM) elects Weston Hicks as Chairman of the Board.
    • Workday (WDAY) Names Zane Rowe Chief Financial Officer.
  • Buyback Announcements or News:
    • Asbury Automotive Group (ABG) Approves New Stock Repurchase Authorization of $250 Million.
    • CapStar Financial Holdings, Inc. (CSTR) Announces Completion of $10 Million Common Stock Repurchase Authorization and $20 Million New Authorization.
  • Stock Splits or News:
    • Grove Collaborative (GROV) Announces 1-for-5 Reverse Stock Split.
    • LABP trading 1/10 r/s split.
  • Dividends Announcements or News:
    • Diana Shipping Inc. (DSX) Announces Special Stock Dividend Distribution Date.
    • DD Goes ex div on Tuesday for $0.36.
    • DOW Goes ex div on Tuesday for $0.70.

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

S&P 500 +9, Dow Jones +61,  NASDAQ +56, and Russell 2000 +4. (as of 7:56 a.m. EDT).  Asia is higher and Europe is higher. VIX Futures are at 20.10 from 20.63 yesterday.  Gold, Silver and Copper higher from yesterday. WTI Crude Oil and Brent Crude Oil higher with Natural Gas lower. US 10-year Treasury sees yields at 3.787% from 3.763% yesterday. The U.S. Dollar is lower versus the Euro, lower versus the Pound and lower against the Yen. Bitcoin is at $26,443 from $26,257 yesterday, lower by -0.11%.

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

  • Daily Positive Sectors: Technology of note.
  • Daily Negative Sectors: Energy, Utilities, Healthcare, Consumer Defensive of note.
  • One Month Winners: Communication Services, Technology, Consumer Cyclical,   of note.
  • Three Month Winners: Communication Services, Technology, Consumer Defensive of note.
  • Six Month Winners: Communication Services, Technology, Consumer Cyclical of note.
  • Twelve Month Winners: Technology, Industrials, Consumer Defensive,  of note.
  • Year to Date Winners:  Communication Services, Technology, Consumer Cyclical of note.

U.S. stocks closed mostly higher Thursday, as technology companies fueled gains amid investor enthusiasm surrounding Artificial Intelligence (AI). The S&P 500 finished 0.9% higher, while the tech-heavy Nasdaq Composite climbed 1.7% and the Dow Jones Industrial Average slipped 0.1%. Chip maker Nvidia Corp. NVDA, +24.37% was the top-performing stock in the S&P 500, surging as the index’s tech sector closed with sharp gains of more than 4%. (MarketWatch – edited by QPI)

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

  • Friday After the Close: None of note.
  • Tuesday Before the Open:

 

Earnings of Note This Morning:

  • Beats: PDD +2.48, BAH +0.06 of note.
  • Flat: None of note.
  • Misses: BIG (1.78), HIBB (0.26), BKE (0.06) of note.
  • Still to Report: None of note.

Guidance:

  • Positive Guidance: BAH of note.
  • Negative Guidance: ADSK, RH, DOMO, DECK, ME, HIBB of note.

Erlanger Research Advance/Decline Chart:

Gap Ups & Down In Early Pre-Market:

  • Gap Up: CGEM +18%, MRVL +16%, PDSB +15%, GPS +11%, WDAY +8%, PARA +8%, GNLX +6%, NVTA +4%, BOH +4% of note.
  • Gap Down: TLRY -19%, ULTA -8%, DOMO -5%, HMST -4%, DECK -4%, RLAY -4%, RH -4% of note.

Insider Action: NFE 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.

  • Stocks making the biggest moves premarket: MRVL, GPS, RH, ULTA, WDAY, ADSK, DECK (CNBC)
  • 5 things to know before the stock market opens. (CNBC)
  • 5 Things You Need to Know to Start Your Day. (Bloomberg) 
  • Bloomberg Lead Story:  Emerging Debt Deal Would Raise Limit, Cap Spending for Two Years. (Bloomberg)
  • Bloomberg  Most Shared Story: Cathie Wood’s ARKK dumped Nvidia stock before $560 billion surge. (Bloomberg)
  • U.S. stocks, bonds rise on hopes a debt deal is near: Market Wrap. (Bloomberg)
  • House Democrats reintroduce bill targeting stock buybacks. (CNBC)
  • Treasury cash plunges below $50 billion as debt-limit fight drags on. (Bloomberg)
  • Bank of America warns of equity stress as 2023 flows turn flat. (Bloomberg)
  • Big Lots (BIG) fell -10.5% as losses doubled expectations and sales fall below forecasts. (MarketWatch)

Moving Average Update:

  • Score goes to 51% from 45%.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the Presidential Daily Briefing, 9:30 a.m. EDT
    • The President and The First Lady host a ceremony for the Louisiana State University Tigers Women’s Basketball team to celebrate their 2022-2023 NCAA Championship season; The Vice President delivers remarks; The Second Gentleman attends, 2:00 p.m. EDT
    • The President welcomes the University of Connecticut Huskies Men’s Basketball team to the White House to celebrate their 2022-2023 NCAA Championship season; The Second Gentleman attends, 5:00 p.m. EDT
    • The President and The First Lady depart the White House en route to Camp David, 6:30 p.m. EDT

Economic:

  • April Personal Income is due out at 8:30 a.m. EDT and is expected to rise to 0.4% from 0.0%.
  • April PCE Core is due out at 8:30 a.m. EDT and is expected to remain at 0.3%.
  • April Durable Orders is due out at 8:30 a.m. EDT and is expected to fall to -0.1% from 0.3%.
  • Int. Trade in Goods 8:30 a.m. EDT
  • Wholesale Inventories 8:30 a.m. EDT
  • May University of Michigan Consumer Sentiment is due out at 10:00 a.m. EDT and is expected to rise to 57.8 from 57.7.
  • Baker Hughes Rig Count 1:00 p.m. EDT

Federal Reserve / Treasury Speakers: None of note.

M&A Activity:

  • Applied Intuition, Inc. to Acquire Embark Technology, Inc. (EMBK) to Enhance Its Products for Autonomous Vehicle Development.
  • Vince Holding Corp. (VNCE) Announces Closing of Transaction and Entry Into Transformative Strategic Partnership With Authentic Brands Group.

Meeting & Conferences of Note:

  • Sellside Conferences: None of note.
      • Previously posted and ongoing conferences: None of note.
  • Top Shareholder Meetings: LOW, TTE, VTEX, YVR
  • Fireside Chat: None of note.
  • Investor/Analyst Day/Calls: LXRX
  • Update: None of note.
  • R&D Day: None of note.
  • Company Event:
  • Industry Meetings:
    • Immunology of Diabetes Society Meeting

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: