QPI Note - 02/01/24: Stocks Break Below 4900. Can 4800 Hold?

Overnight Summary: The S&P 500 closed Wednesday lower by -1.61% at 4845.65 from Tuesday lower by -0.06% at 4924.97. The overnight high was hit at 4889 at 6:05 a.m. EST while the overnight low was hit at 4866 at 4:05 p.m. EST. The range overnight was 23 points as of 6:20 a.m. EST. The 10-day average of the overnight range is at 19.60 from 19.50.  The average for May-January average was 20.88 from 20.87 during May-November. Currently, the S&P 500 is higher by 16.50 points at 6:20 a.m. EST.

Executive Summary: Powell moved to Hawkish in September, then Dovish in November and December and now back to Hawkish in January. The S&P 500 lost -1.6% yesterday its worst day since last September. The easy trading is now complete. Expect more volatility ahead. (See our note out yesterday indicating this could happen)

• December Construction Spending is due out at 10:00 a.m. EST and expected to remain at 0.4%

• January ISM Manufacturing Index is due out at 10:00 and expected to fall to 47.3% from 47.4%.

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.

Earnings Out After The Close: 

• Beats: MKL +36.07, CACC +1.39, CCS +0.62, NXT +0.47, QRVO +0.44, THG +0.40, QCOM +0.38, AXS +0.35, FLEX +0.26, ALGN +0.24, MTH +0.23, MEOH +0.21, UGI +0.17, PTC +0.15, MTG +0.10, CTVA +0.09, WOLF +0.08, SNCY +0.07, MET +0.05, TTEK +0.05, KLIC +0.04, DGII +0.04, RYN +0.02, BOOT +0.02, EGHT +0.02, BHE +0.02 of note.

• Flat: MXL +0.00, CLB +0.00, LSTR +0.00, SIGI +0.00, AVB +0.00 of note.

• Misses: CVGW (0.66), CHRW (0.30), AFL (0.20), CNMD (0.05), SEIC (0.02), VSTO (0.01), BV (0.01) of note.

Capital Raises:

• IPOs Priced or News:

  • Amer Sports (AS-NYSE) prices 105 mln share IPO at $13.00 per share, below the $16-18 expected range.

• New SPACs launched/News:

  • 10X Capital Venture Acquisition Corp. III (VCXB )Receives NYSE Notice Regarding Noncompliance.

  • Vision Sensing Acquisition Corp. (VSAC) Announces Intention to Extend Period to Consummate Initial Business Combination to March 3, 2024.

• Secondaries Priced:

  • REVB: Announces Pricing of $6.2 Million Public Offering.

• Common Stock filings/Notes:

  • ATNF: Filed Form S-1.. 13,950,976 Shares of Common Stock.

  • CALC: Filed Form S-3.. 10,735,725 shares of Common Stock.

  • IVP: Filed Form S-1.. 7,869,182 Shares of Class A Common Stock.

  • KPRX: Offering 27 million shares at $.5524 per share and then warrants at various strikes.

• Selling Shareholders of note:

  • OLMA: Files for 13,211,381 shares of common stock by selling shareholders.

• Private Placement of Public Entity (PIPE):

  • APTO: Announces Closing of $9.7 Million Public Offering and Concurrent $4 Million Private Placement with Hanmi Pharmaceutical, Including Full Exercise of Over-Allotment Option.

• Mixed Shelf Offerings:

  • ARQT: Files $300 million mixed shelf securities offering.

• Debt/Credit Filing and Notes:

  • ABL: Filed Form S-1.. 9.875% Fixed Rate Senior Notes due 2028.

• Convertible Offering & Notes Filed:

  • RKLB: Announces proposed offering of $275 million convertible senior notes due 2029.

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 Movers: 

  • NXT: +18% Earnings

  • RNAZ: +16% Compliance with Minimum Stockholders’ Equity Requirement and Continued Listing on The Nasdaq Stock Market

  • ALGN: +10% Earnings

  • EZPW: +6.5% Earnings

  • QRVO: +4.5% Earnings

  • VLCN: -21% Reverse Stock Split

  • MXL: -12% Earnings

  • RKLB: -10% Proposed Offering of $275 Million Convertible Senior Notes

  • CNMD: -9% Earnings

  • MET: -3.5% Earnings

  • AFL: -3% Earnings

  • QCOM: -1.5% Earnings

• News Items After the Close:

  • Stocks making the biggest moves after hours: QCOM, ALGN, MXL, BOOT, WOLF, MET, QRVO, CHRW, RKLB (CNBC)

  • Fed’s Powell Cements Pivot But Pushes Back on Timing of Cuts. (Bloomberg)

  • Jeffrey Gundlach says all the ‘Goldilocks’ talk makes him nervous, thinks recession is still likely. (CNBC)

  • GOLDMAN: “.. Powell gave a strong signal that a March funds rate cut ‘is probably not the most likely case.’ Given this comment — as well as our expectation of solid growth in Q1 and a temporary firming in sequential inflation in January — we have pushed back our forecast of the first cut from March to May.” (CQ CNBC)

  • Qualcomm (QCOM) earnings beat estimates as smartphone chip sales suggest recovery. (CNBC)

  • FAA says comprehensive Boeing (BA) 737 audit will review Spirit fuselage production. (Reuters)

  • Paramount (PARA) board takes steps toward sale as Byron Allen submits $14B buyout bid. (NYPost)

  • Deutsche Bank (DB) to cut 3500 jobs. (Reuters)

• Exchange/Listing/Company Reorg and Personnel News:

  • Advanced Emissions Solutions (ADES) completes rebrand as Arq, Inc.; Co will begin trading on the Nasdaq Global Market under the new ticker symbol "ARQ" at the open of the market on February 1.

  • BellRing Brands (BRBR) Executive Chairman Robert Vitale ends medical leave and resumes full duties.

  • Honeywell (HON) CEO Vimal Kapur will succeed Darius Adamczyk as Chairman of the Board in June 2024 and William S. Ayer will become independent Lead Director in May 2024.

  • NETGEAR (NTGR) promotes Charles Prober to CEO; co-founder, current CEO and Chairman Patrick Lo to retire.

  • Quantum Computing Inc. (QUBT) Board of Directors Appoints Dr. William McGann as the Company's CEO and Co-Founder Robert Liscouski as Chairman of the Board.

  • Ross Stores (ROST) promotes Karen Fleming to Chief Merchandising Officer, dd's DISCOUNTS.

  • Sanofi (SNY) announced François-Xavier Roger will be appointed Chief Financial Officer.

  • Takeda Pharma (TAK) announced that Costa Saroukos, chief financial officer, has decided to leave Takeda to return to his home-country of Australia to be closer to family.

  • Waldencast (WALD)CFO and COO Philippe Gautier is leaving the company, effective today; names Manuel Manfredi as CFO.

• Buyback Announcements or News: 

  • OFG Bancorp's (OFG) Board of Directors approved a new $50 million stock repurchase authorization plan as part of OFG’s capital actions. (see Dividends)

  • Shell plc (SHEL) also announces the commencement of a $3.5 billion share buyback program covering an aggregate contract term of approximately three months.

• Stock Splits or News:

  • Volcon (VLCN) Announces Reverse Stock Split.

  • Reverse Split Stocks today CMAX 1/30 TCRT 1/15.

• Dividends Announcements or News:

  • AvalonBay (AVB) increased its quarterly dividend by 3% to $1.70 per share.

  • CF Industries (CF) increases quarterly dividend to $0.50 per share from $0.40 per share.

  • CMS Energy (CMS) increases quarterly dividend to $0.5150 per share from $0.4875 per share.

  • DGX: Increases Quarterly Dividend 5.6% to $0.75 Per Share.

  • Esquire Financial (ESQ) increases quarterly cash dividend 20% to $0.15 per share from $0.125 per share.

  • Eversource Energy (ES) increases quarterly cash dividend to $0.715 per share from $0.675 per share.

  • OFG Bancorp (OFG) increases quarterly cash dividend to $0.25 per share from $0.22 per share.

  • UNITIL Corporation (UTL) increases quarterly dividend to $0.425 per share from $0.405 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 +23, Dow Jones +68, NASDAQ +122, and Russell 2000 +22.  (as of 7:54 a.m. EST).  Asia is lower ex South Korea while Europe is lower ex the FTSE this morning. VIX Futures are at 14.60 from 14 this morning.  Gold, Silver and Copper lower this morning. WTI Crude Oil and Brent Crude Oil are higher with Natural Gas higher as well. US 10-year Treasury sees its yield at 3.994% from 4.032% yesterday morning. The U.S. Dollar is higher versus the Euro, higher versus the Pound and lower against the Yen. Bitcoin is at $42,211 from $42,617 lower by -1.25% this morning.

Sector Action –  

• Daily Positive Sectors: None of note.

• Daily Negative Sectors: Communication Services, Technology, Energy, Consumer Cyclical, Financial, Industrials, Basic Materials, Real Estate of note.

Stocks veered lower Wednesday after Federal Reserve Chair Jerome Powell all but took a March interest-rate cut off the table. It didn’t stop most major indexes from grinding out their third consecutive month of gains.  The top three equity indexes finished January in the green despite choppy trading that veered between growing confidence about the U.S. economy and continued caution toward the central bank’s monetary policy for the rest of the year.  Wednesday, the emphasis was on caution as some investors focused on interest rates staying at their current high level for a longer period of time. The S&P 500 fell -1.6% on the day, the largest one-day percentage decline since September. The Nasdaq Composite fell -2.2% as each of the so-called Magnificent Seven companies logged losses, and the Dow retreated -0.8%, or 317 points.  For the month of January, the S&P 500 led the pack with a 1.6% advance, while the Dow climbed 1.2%. The Nasdaq, weighted down by slumping shares in Tesla (TSLA) and Apple (AAPL), logged a 1% monthly gain. Meanwhile the Russell 2000 fell -3.93% for the month.  (WSJ - edited by QPI)

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

• Thursday After the Close:

• Friday Before the Open:

Earnings of Note This Morning:

• Beats: HII +2.63, SNY +1.45, PH +0.89, ATKR +0.51, GOOS +0.37, LAZ +0.30, LPG +0.29, JHG +0.29, BDX +0.28, FCFS +0.25, LANC +0.22, CAH +0.22, WNC +0.16, MRK +0.14, SWK +0.13, RCL +0.11, RVTY +0.09, SR +0.09, RCI +0.08, ETN +0.08, IP +0.07, TSCO +0.06, DLX +0.05, FLWS +0.05, PBI +0.05, BALL +0.04, DGX +0.04, TT +0.04, EPD +0.04, DOV +0.03, ALGM +0.03, BR +0.03, SBH +0.02, ATI +0.02, WEC +0.02, SXC +0.02, HON +0.01, MTSI +0.01, KEX +0.01, CMS +0.01, SIRI +0.01 of note.

• Flat: PTON, MO of note.

• Misses: BC (0.20), WRK (0.15), OCSL (0.04), BIP (0.01), TECH (0.01) of note.

• Still to Report: RACE, ITW, SNDR of note.

Company Earnings Guidance:

• Positive Guidance: QRVO, ALGNCCS, NXT, RVTY, TT, ETN, RCL, MRK, MTSI, PH of note.

• Negative Guidance: UTZ, EGHT, WOLF, BHE, MXL, KLIC, BOOT, AVG, LSTR, FLEX, CTVA, BDN, HON, BC, DOV, DGX, FLWS, WNC, PTON, SIRI, ALGM of note.

Erlanger Research Advance/Decline Chart:  

Gap Ups & Down In Early Pre-Market:

• Gap Up: NXT +23%, CMPR +14%, ALGN +12%, RYN +8%, AHG +7%, PTGX +6%, QRVO +5%, DB +5%, CTVA +5%, EZPW +4%, DGII +4%, RACE +4%, MEOH +4%, SNCY +4% of note.

• Gap Down: MXL -13%, ARQT -10%, CNMD -9%, RKLB -7%, ING -7%, BV -7%, WOLF -6%, HSAI -6%, LSTR -4% of note.

Insider Action: AXR 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 Today. (CNBC)

• Bloomberg Lead Story: A $560 Billion Property Warning on Maturities That Hit By End of 2025 On Banks from Tokyo to NYC.(Bloomberg)

• Bloomberg Second  Most Shared Story: NYCB plunges as real estate risk jolt market. (Bloomberg)

• A divided Bank of England left interest rates unchanged and will review future changes. (CNBC)

• OPEC+ sticks with production cuts in the first quarter. (Bloomberg)

• Peloton (PTON) gives dismal quarterly guidance. (CNBC)

• Merck (MRK) beats results as top drugs spot strong sales. (CNBC)

• Bloomberg: The Big Take: Why wind farms are getting paid millions to turn off.   (Podcast)

• NPR Marketplace:  How we navigate loss.  (Podcast)

• NY Times Daily:  Why are Republicans killing a plan to secure the border. (Podcast)

• Wealthion:  Jim Rickards, "Will Stock Market Bubble Explode?" (Podcast)

Podcasts are presented to provide interesting viewpoints on current issues. We do not necessarily support each viewpoint. They are more meant to get you thinking!

Moving Average Update: Score comes way down to 57% from 94% as short term Moving Averages are breached.

Geopolitical: 

• President’s Public Schedule:

  • The President receives the Presidential Daily Briefing, 7:00 a.m. EST

  • The President departs the White House en route to Capitol Hill, Washington, D.C., 7:30 a.m. EST

  • The President attends the National Prayer Breakfast, 8:00 a.m. EST

  • The President arrives at the White House, 9:45 a.m. EST

  • The President departs the White House en route to Joint Base Andrews, 11:40 a.m. EST

  • The President departs Joint Base Andrews en route to the Detroit Metro Area, Michigan, 12:10 p.m. EST

  • The President arrives in the Detroit Metro Area, Michigan, 1:35 p.m. EST

  • The President participates in a political event, 3:45 p.m. EST

  • The President departs the Detroit Metro Area, Michigan en route to Philadelphia, Pennsylvania, 7:35 p.m. EST

  • The President departs Philadelphia, Pennsylvania en route to New Castle, Delaware, 9:05 p.m. EST

  • The President arrives in New Castle, Delaware, 9:20 p.m. EST

Economic:

• Challenger Job Cut 7:30 a.m. EST

  • Actual: 82.307K VS 34.817K Previous

• Jobless Claims 8:30 a.m. EST

• Productivity and Costs 8:30 a.m. EST

• PMI Mfg Final 9:45 a.m. EST

• December Construction Spending is due out at 10:00 a.m. EST and expected to remain at 0.4%

• January ISM Manufacturing Index is due out at 10:00 a.m. EST and expected to fall to 47.3% from 47.4%.

• EIA natural Gas Report 10:30 a.m. EST

Federal Reserve / Treasury Speakers: None of note.

M&A Activity and News: 

• Altus Power (AMPS) announces acquisition of 84MW portfolio from Vitol for proceeds of ~$118 million.

• Globalink Investment Inc. (GLLI): Alps Global Holding Berhad and GLLI have entered into a definitive merger agreement with enterprise value of $1.6 billion.

• Qorvo (QRVO) has reached a definitive agreement to acquire Anokiwave.

Meeting & Conferences of Note:

• Sellside Conferences:

  • BMO Infrastructure & Utilities Conference

  • Emerald Asset Management Groundhog Day Investment Forum

    • Previously posted and ongoing conferences:

      • Lytham Partners Investor Select Conference

      • Microcap Conference

• Top Shareholder Meetings: GLAD PSMT SISI

• Investor/Analyst Day/Calls: TXN

• Industry Meetings:

  • Idaho Mining Day

  • International Master Course on Aging Science World Congress

  • The Empowering Women to Champion Airway conference

    • Previously posted and ongoing conferences:

      • Microbiome Movement Drug Development Summit

Top Tier Sell-side Upgrades & Downgrades: