LaDucTrading

Morning Thoughts: Wednesday May 9th

Good Morning Fishing Club Members!

Market is trying to get up over prior resistance levels ($SPX $2683) and follow through. I have theorized it will and we will rally into May 18 options expiry date before the market pulls back. As his quant signals fired last week, Steve is already positioned for this bullish move (as he packs and readies his household for a move). I am more hedged, waiting for price to confirm, while intraday trading the chop in the trading room. Now, on the eve of me heading out of town Friday for a week, I will be adding a few new swing positions for which you will be alerted via Trade Alerts and checking in sporadically so, as always, manage your exits closely or let the computer do it for you!


Result of Trump exiting the Iran deal has caused oil, yields and US dollar to trade higher (which in turn is crushing emerging market currencies).

Other Casualties of the exited Iran Deal:

Boeing and Airbus have almost $40 billion in aircraft deals imperiled as new sanctions mean the loss of export licenses.

USD and rates are jumping. The 10-year Treasury yield is back above 3 percent this morning, hitting 3.012 percent ahead of a $25 billion bond auction at 1:00 p.m. Eastern Time.

XLU had a huge down day yday which I suspect means IYR will follow (also had large put buying in UOA yday). This set up foretells higher TNX which implies lower TLT. I still have a Price Targe for IEF that has not been met before I safely Trade TLT long again.

Oil and gas plays were bid up in yesterday’s session along with a strong flow of UOA. This looks to be the hot sector to chase as the Iran Sanctions will help US shale companies as they ramp up production to make up for the reduction in oil output from Iran.

Yen is down (FXY) and so is Gold (GLD GDXY) as USD rose sharply with USD/JPY when Japan started up shop last night. For Big Picture and price levels/targets for these assets, see my post here .

A hard Exit means oil rises, and it has: crude is up to near $71 and Brent to $76.86 this morning.

Macro Matters

Should oil average $70 a barrel this year, it would constitute a drag on U.S. growth equal to about half the 0.7 percentage-point GDP boost expected from the U.S. fiscal package, according to Oxford Economics.

U.S. sanctions: implications and next steps

The Treasury Department has already published a specific set of guidance as to what sanctions will be back in place by when, essentially putting less intensive sanctions on a 90-day clock (expiring on August 6) and more intensive ones on a 180-day clock (expiring on November 4).

Saudi Arabia stands to be the biggest winner from sanctions

The US can eliminate its trade deficit or run the world’s dominant currency—but not both. America provides the rest of the world with liquidity and a safe place to store assets.

Stocks of Interest in News 

Walt Disney Co.’s Robert Iger said he is not afraid of a bidding warwith Comcast Corp. That contributed to the post EPS (which has been a big beat) to sell off after hours.

  • Disney (DIS) Q2 adjusted EPS $1.84/$14.55B vs. est. $1.69/$14.08B; Q2 Media Networks revenue $6.14B vs. $5.95B last year; Q2 Parks and Resorts revenue $4.88B vs. $4.3B a year ago; Studio Entertainment revenue $2.45B vs. 2.03B last year; Consumer Products & Interactive Media revenue $1.08B vs. $1.06B last year; says Q2 results driven by parks/resorts and studio business
  • Match Group (MTCH) Q1 EPS 26c/$407.4M vs. est. 24c/$386.2M; sees 2Q revenue $405M-$415M vs. est. $391.6M; sees 2Q adjusted Ebitda $160M-$165M vs. est. $143.6M; says revenue growth will be driven by Tinder, stability at other brands; boosts 2018 revenue forecast by $100M to $1.6B-$1.7B vs. est. $1.6B; Tinder average subs 3.5M in 1Q, up 368K QoQ or 1.6M YoY
  • Electronic Arts (EA) Q4 EPS $1.95 vs. est. $1.17; reports Q4 Net Bookings $1.26B vs. est. $1.24B; announces new $2.4B stock repurchase program; sees FY19 EPS $3.55 on revs $5.60B vs. est. $4.45/$561B; sees FY19 Net bookings is expected to be approximately $5.55B
  • Applied Optoelectronics (AAOI) shares fell -9%; Q1 EPS 28c/$65.2M vs. est. 33c/$68.96M; sees Q2 EPS 39c-42c on revs $75M-$81M vs. est. 46c/$77.5M
  • Twilio (TWLO) Q1 adjusted EPS loss (4c)/$129.1M vs. est. loss (7c)/$116.55M; sees Q2 adjusted EPS loss (6c)-(5c) on revs $129M-$131M vs. est. loss (6c)/$123.17M; raises FY18 revenue view to $538M-$544M from $506M-$514M
  • Overstock.com (OSTK) Q1 EPS loss ($1.74)/$445.3M
  • Papa John’s (PZZA) Q1 revs 50c/$4274M vs. est. 62c/$440.7M; 1Q systemwide international comparable sales +0.3% vs. estimate +2.7% and Q1 Systemwide North America comparable sales -5.3%
  • The American Petroleum Institute (API)reported that U.S. crude supplies fell by nearly -1.9M barrels for the week ended May 4; showed a fall of about -2.1M barrels in gasoline stockpiles, while inventories of distillates dropped -6.7M barrels

Upgrades/Downgrades of Interest

  • $CHUY Raised to $34 at Stephens
  • $SQ Stifel UGto Buy
  • $ETSY Raised to $27 at Piper Jaffray
  • $EA Raised to $148 at Piper Jaffray
  • $MNST Lowered to $50 at SunTrust
  • $VRX Raised to $23 at Jefferies

Events Calendar for Today

  • 7:00 AM EST       MBA Mortgage Applications Data
  • 8:30 AM EST       Producer Price Index (PPI) MoM for April…est. 0.2%
  • 8:30 AM EST       PPI Ex: Food & Energy MoM for April…est. 0.2%
  • 8:30 AM EST       PPI Ex: Food & Energy YoY for April…est. 2.4%
  • 10:00 AM EST     Wholesale Inventories MoM, Mar-F…est. 0.5%
  • 10:30 AM EST     Weekly DOE Inventory Data
  • 1:15 PM EST        Fed’s Bostic speaks on economic outlook and monetary policy

Earnings Calendar:

  • Earnings Before the Open: AEE, ADT, Ahold, AMBC, CEVA, COTY, DTEGY, DLPH, SBGI, WIX
  • Earnings After the Close: ALB, ATUS, BKNG, CTL, FOXA, FTI, GKOS, IAC, INFN, MTCH, OTEX, RNG, ROKU, SYNA, TROX

Notable Events This Week:

  • Tuesday – DIS (2.87% of Dow) reports after the bell so expect some directional bias in Dow + SPY as a result.
  • Wednesday – BKNG (formerly Priceline), which is 1.36% of NDX, reports after the bell.
  • Thursday – BoE rate decision. Sterling is 200D and oversold, since Gov Carney warned that a rate hike was not a certainty, so if there is a rise, expect the currency to turn very sharply upwards. US CPI print can pull USD. A lower core (ex Food and Energy) print is forecast, down to 1.9% from last month’s 2.1%. China inflation print can affect the Yuan which can affect Gold. NVDA reports, maker of crypto mining chips, and 1.874% of NDX, reports after the bell.

Some Good Reads

 

Good Luck Today! And remember, we make our own luck.

Samantha

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