CAPIS Morning Note – 12/16/22: Stocks Look To Close On Lows For The Week As Options Expiration Inflicts Pain.

Overnight Summary: The S&P 500 closed Thursday at 3895.75 (lower by -2.49%) from Wednesday at 3995.32 (lower by -0.61%).  The overnight high of 3934.50 was hit at 9:45 p.m. EST. The low was hit at 3871.50 at 5:50 a.m. EST, a range of ~63 points high to low.  At 7:25 a.m. EST, the S&P 500…

Overnight Summary: The S&P 500 closed Thursday at 3895.75 (lower by -2.49%) from Wednesday at 3995.32 (lower by -0.61%).  The overnight high of 3934.50 was hit at 9:45 p.m. EST. The low was hit at 3871.50 at 5:50 a.m. EST, a range of ~63 points high to low.  At 7:25 a.m. EST, the S&P 500 (mini) was -39.50.

Earnings Out After The Close: 

  • Beats: ADBE +0.10.
  • 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 awhile you can uncover stocks prior to a pop or drop.

 

Capital Raises:

  • IPOs Priced or News: None of note.
  • New SPACs launched/News:
    • Hudson Acquisition I Corp. (HUDA) Announces Receipt of Notice from Nasdaq Regarding Late Filing of Quarterly Report on Form 10-Q.
  • Secondaries Priced:
    • NVAX: Announces Pricing of $65 Million Public Offering of Common Stock, Price at $10. (See Notes Priced)
    • PLUR: Prices $8.2 million Private Placement Offerings Priced At-The-Market Under Nasdaq Rules.
    • RNA: Pricing of Upsized Public Offering of Common Stock.. 12,000,000 shares @$17.25.
  • Notes Priced of note:
    • NVAX: Announces Pricing of $150 Million Offering of Convertible Senior Notes.
  • Common Stock filings/Notes:
    • AGFY: Launch of Public Offering. (Canaccord bookmanager)
    • PRSO: Filed Form S-1.. 3,675,000 Shares of Common Stock issuable upon exercise of the Purchase Warrants.
  • Direct Offering: None of note.
  • Selling Shareholders of note: None of note.
  • Private Placement of Public Entity (PIPE): (See PLUR above in Secondaries Priced)
  • Mixed Shelf Offerings:
    • EQH: Files for $600 million mixed securities shelf offering.
    • MTZ: Files mixed securities shelf offering.
    • PFLT: Files for $500 million mixed securities shelf offering.
  • Debt Filing/Notes: None of note.
  • 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:

  • After Hours: 
    • Trading Up: EXAS +24%, OB +10%, ADBE +5%, TRIN +4%.
    • Trading Down: GH -39%.
  • News Since The Close:
    • U.S. Steel (X): Commercial steel demand in December ‘better,’ scrap prices rise. (MarketWatch)
    • Guardant Health (GH) stock plunges, Exact Sciences (EXAS) stock soars after colorectal-cancer test study results. (MarketWatch)
    • Adobe (ADBE) stock jumps after earnings beat, in-line annual forecast. (MarketWatch)
    • Senate Passes $858 Billion Defense-Policy Bill. (WSJ)
    • Raytheon Technologies (RTX) awarded $619 million U.S. Navy contract modification.
    • Oshkosh (OSK) awarded $543 million U.S. Army contract modification.
  • Exchange/Listing/Company Reorg and Personnel News:
    • Argo Blockchain PLC (ARBK) Announces Nasdaq Notification – Minimum Bid Price Deficiency.
    • Cosmos Holdings Inc. (COSM) Changes its Name to Cosmos Health Inc. (See Splits)
    • Digital World Acquisition Corp (DWAC) received a letter of resignation from Luiz Philippe Braganza, resigning as Chief Financial Officer.
    • Enservco Corporation (ENSV) Receives Notice of Noncompliance from NYSE American Exchange Related to Stockholders’ Equity Level.
    • Mid-Southern Bancorp, Inc. (MSVB) Announces Increase in the Number of the Board of Directors and Appointment of James O. King III as a New Director.
    • Mitek Systems (MITK) files Form NT, which delays 10-K filing.
    • NYSE to Suspend Trading Immediately in Pennsylvania Real Estate Investment Trust (PEI) and Commence Delisting Proceedings.
    • Rockley Photonics (RKLY) Announces Receipt of Notice from NYSE of Non-Compliance with Continued Listing Standards.
    • Starry (STRY) Announces the NYSE Has Commenced Delisting Proceedings.
    • Synchrony Financial (SYF) Executive Chair Margaret Keane to retire.
    • Synovus (SNV) appoints CEO Kevin Blair to Chairman.
    • Tarsus (TARS) Added to NASDAQ Biotechnology Index.
    • TuSimple Holdings (TSP) appoints interim CFO Eric Tapia as Chief Financial Officer.
  • Buyback Announcements or News:
    • Apollo Medical Holdings, Inc. (AMEH) Announces Share Repurchase Program.
    • Centene (CNC) authorizes $2 billion increase to stock repurchase program.
    • Outbrain (OB) Board of Directors Authorizes Share Repurchase Program.
    • Pediatrix Medical Group (MD) appoints James D. Swift, M.D. as CEO.
    • Rithm Capital (RITM) Stock Repurchase Program up to $200 million.
    • Seacoast Banking (SBCF) announces renewal of share repurchase program, up to $100 million.
    • Shoe Carnival (SCVL) Announces New $50 Million Share Repurchase Program. (See Dividends)
  • Stock Splits or News:
    • Camber Energy, Inc. (CEI) Discloses One-for-Fifty Reverse Stock Split.
    • Cosmos Holdings Inc. (COSM) Announces a 1-For-25 Reverse Stock Split.
    • FVCBankcorp, Inc. (FVCB) Announces Five-for-Four Common Stock Split.
  • Dividends Announcements or News:
    • AVGO Goes ex div on Monday for $4.60.
    • CenterPoint (CNP) declares regular common stock dividend of $0.19 per share, up $0.01.
    • Ensign Group (ENSG) increases quarterly dividend to $0.0575 per share.
    • Hersha Hospitality Trust (HT) announces special dividend of $0.50/share and continuation of quarterly cash dividend.
    • Preferred Bank (PFBC) increases its quarterly dividend 28% to $0.55 per share.
    • Shoe Carnival (SCVL) Declares Quarterly Cash Dividend.
    • Trinity Capital (TRIN) increases its quarterly dividend 2.2% to $0.61 per share; consists of a regular quarterly dividend of $0.46 and a supplemental dividend of $0.15.
    • Urstadt Biddle Prop (UBA) increases its quarterly dividend 25% to $0.25 per Class A Common share.

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

S&P 500 -35, Dow Jones -321,  NASDAQ -57,  and Russell 2000 -21. (as of 7:58 a.m. EST).  Asian markets are lower.  Europe markets are trading lower. VIX Futures are at 25.10 from 23.25.  Gold higher, Silver lower and Copper higher.  WTI Crude Oil and Brent lower with Natural Gas lower as well. $ barely down. US 10-year Treasury sees yields at 3.495% from 3.48%. The U.S. Dollar is lower versus the Euor, lower versus the Pound and higher against the Yen. Bitcoin is at $17,000 from  $17,655 lower by -2.50%.

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

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

U.S. stock losses deepened Thursday, after central bank officials on both sides of the Atlantic signaled they have more work to do to tame inflation and a batch of fresh data heightened recession fears.  The major U.S. stock indexes started the week higher, then fell Wednesday when the Federal Reserve raised rates by half a percentage point. What spooked investors wasn’t the rate increase, which was widely expected, but that the Fed raised its estimates of how high rates may ultimately have to go.  The S&P 500 fell 99.57 points, or 2.5%, to 3895.75 Thursday. The tech-focused Nasdaq Composite dropped 360.36 points, or 3.2%, to 10810.53. The Dow Jones Industrial Average fell 764.13 points, or 2.2%, to 33202.22. All three indexes closed at their lowest levels since early November. The Dow notched its largest one-day decline since mid-September.  (WSJ)

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

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

Earnings of Note This Morning:

  • Beats: WGO +0.28, ACN +0.15, DRI +0.08.
  • Flat: None of note.
  • Misses: None of note.
  • Still to Report: None of note.

Guidance:

  • Positive Guidance: ADBE, X, STLD of note.
  • Negative Guidance: LEN of note.

Erlanger Research Advance/Decline Chart: 

Gap Ups & Down In Early Pre-Market:

  • Gap Up: EXAS +16%, OCGN +10%, OB +7%, ADBE +5% of note.
  • Gap Down: GH -33% of note.

Insider Action: RWAY, DOC 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.

  • Stocks making the biggest moves premarket: ACN DRI WGO MAXR GH META ADBE EXAS SCHL X . (CNBC)
  • 5 things to know before the stock market opens. (CNBC)
  • Five Things You Need to Know to Start Your Day. (Bloomberg)
  • Bloomberg Lead Story: Fed’s High Inflation Forecast Baffles Wall Street After Soft CPI. (Bloomberg)
  • Bloomberg Most Read Story: Quants May Be Forced to Sell $30 Billion of Stock Futures On Break Of 3931. (Bloomberg)
  • Russia holds rates at 7.5% but calls inflation risks “prevailing”. (CNBC)
  • Senate passes a one-week spending bill. (CNBC)
  • Darden (DRI) beats estimates and raises outlook. (CNBC)
  • Dow Jones Industrial Average has the worst day in three months. (CNBC)

Moving Average Update:

  • Score craters to 14% from 68%.

Geopolitical: 

  • President’s Public Schedule:
    • The President receives the Presidential Daily Briefing, 9:30 a.m. EST
    • The President participates in a town hall and speaks with veterans and veteran survivors to discuss the historic expansion of benefits and services resulting from the PACT Act, 12:00 p.m. EST
    • The President departs New Castle, Delaware en route Joint Base Andrews, 12:55 p.m. EST
    • The President departs Joint Base Andrews en route the White House, 1:45 p.m. EST
    • The President arrives at the White House, 1:55 p.m. EST
    • The President and The First Lady depart the White House en route New Castle, Delaware, 8:55 p.m. EST
    • The President and The First Lady arrive in New Castle, Delaware, 9:50 p.m. EST

Economic: 

  • PMI Composite Flash 9:45 a.m. EST
  • Baker Hughes Rig Count 1:00 p.m. EST

Federal Reserve / Treasury Speakers:

  • Federal Reserve San Francisco President Mary Daly 12:00 p.m. EST

M&A Activity:

  • B&G Foods (BGS) to sell the Back to Nature brand to Barilla America.
  • D.R. Horton (DHI) acquires Riggins Custom Homes, a home builder in Northwest Arkansas, for $107 million in cash.
  • Hormel Foods (HRL) announced it has acquired a minority stake in PT Garudafood Putra Putri Jaya Tbk.
  • Instructure (INST) acquires LearnPlatform.
  • Maxar Technologies (MAXR) To Be Acquired by Advent International for $6.4 Billion ($53 per share in cash).
  • Prenetics (PRE) is acquiring a majority stake in ACT Genomics Holdings Company Limited.
  • Trean Insurance Group (TIG) Announces Definitive Agreement to be Acquired by Altaris Capital Partners.

Meeting & Conferences of Note:

  • Sellside Conferences:
    • None of note.
      • Previously posted and ongoing conferences:
        • Jefferies Denver Healthcare Summit (12/14/22-12/16/22)
        • ROTH Capital 11th Annual Deer Valley Consumer Conference 2022 (12/14/22-12/18/22)
        • Seaport Research Annual Corporate Access Dealer Days
  • Company Meetings: ATEK, THO
  • Fireside Chat: OPPT
  • Investor/Analyst Day/Calls: AGCO, CNC, INTC
  • Update: None of note.
  • R&D Day: None of note.
  • Company Event: None of note.
  • 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: