Mid-Morning Look: April 11th,2017

eOptionDaily Market Report

Equities showing weakness to start the day (still on light volumes) as oil prices slide for only the first time in six days, while the tech heavy NASDAQ underperforms, led by a decline in semiconductor stocks (AAPL suppliers specifically). Volatility picking up as the CBOE Volatility index “fear index” (VIX) trades above 15, to touch its highest levels since mid-November (highs today 15.45). No major economic data today and earnings not getting underway until Thursday morning (banks report). Safe haven/defensive assets and stocks seeing strength early (gold spikes, bonds to best levels of 2017, yen jumps) as investors rotate back out of riskier assets given the ongoing geopolitical topics of late (North Korea and Syria), while concern remains over French election, and as markets decipher what last Friday’s jobs report miss means for future pace of interest rate hikes by the FOMC.

Treasuries, Currencies and Commodities

  • In currency markets, the dollar slipped again amid increasing geopolitical tensions, which has pulled investors away from risky assets like stocks in favor of safety plays like the Japanese yen, gold and U.S. government debt; the euro rises above 1.06, above recent 1-month lows
  • Precious metals rise as gold gained over $13, or 1% at $1,267 an ounce—trading above its 200-day moving average of $1,260.65, as geopolitical fears (North Korea tensions and Syria bombing after chemical gas attack) as well as European elections (France) increase interest in safe havens
  • Energy futures slide after 5-days of gains for WTI crude; earlier today, Bloomberg reported Saudi Arabia decreased production to 9.9 million barrels a day in March, from 10 million barrels a day in February; markets await weekly inventory data tonight (API) and tomorrow (DOE)
  • Treasury market’s rise as yields drop to near 2017 lows, as investors flee to safe-haven, defensive related assets, while global sentiment slides; VIX to best levels this year as stocks slide; the yield on the 10-yr drops to 2.31% (below YTD close on 2/24), with 2-yr 1.24%

Economic Data

  • The National Federation of Independent Business (NFIB) said its monthly sentiment gauge fell 0.6 point to 104.7, a slightly larger decline than the 0.5-point dip forecast by economists
  • U.S. job openings rose to 5.743M in February from 5.625M prior month; Feb. pace of hiring 3.6% vs. 3.7% prior month

Sector Movers Today

  • Airlines; group out with monthly metrics; UAL fell early on continued fallout of video of passenger being dragged off overcrowded flight (also monthly metrics out); AAL said Q1 prelim TRASM up ~2%-4% YoY vs. forecast 1.5%-3.5%, citing higher yields; SKYW said March Available Seat Miles fell (-5.1%) YoY; ALGT revises down guidance: unit revenue guidance revised down, unit cost guidance tightened to higher end of range;AZUL 85.44M share IPO priced at $20.06
  • Internet; SALE to be acquired for $11.60 per share in cash by Harland Clarke Holdings https://goo.gl/JAfJfK; in research, WIX was downgraded to neutral at Cantor as find limited room for upside in the stock, which is up 70+% YTD; YELP was upgraded to overweight at Pacific Crest saying competition concerns are overdone, citing checks with 30 local ad customers; Yelp’s franchise is plenty healthy, insulated from Google
  • Hard disk drive makers; STX upped to buy at Longbow on the opportunity for earnings upside as the benefit from NAND shortages appears to be spilling-over to HDDs; WDC was upgraded to overweight at JP Morgan saying will benefit from a NAND shortage and a stabilizing PC market (raised tgt to $116 from $80) – says NAND shortage should also boost HDD demand and pricing
  • Semiconductors; AAPL chip maker Dialog Semi (DLG.GY) shares plunge after one analyst warned that Apple Inc. probably will cut back on the use of the company’s power-management chips; ON was downgraded to underperform on valuation noting shares are up 35% since closing FCS, outperforming the broader group by ~10 pts; other AAPL suppliers (AVGO, QRVO, CRUS, SWKS) after above analyst report suggested evidenceAAPL is developing own power mgmt chip

Stock GAINERS

  • ARCO +5%; upgraded to buy with $10 target at Bank America (from underperform)
  • AUPH +2%; following initiation at Cantor with overweight and $14 tgt
  • CBIO +5%; said it achieved a key milestone under its collaboration with ISU Abxis to advance the Factor IX program towards its first human clinical trial
  • PUMP +1%; initiated by seven analyst with equivalent of buy ratings for each
  • SALE +49%; to be acquired for $11.60 per share by Harland Clarke Holdings https://goo.gl/JAfJfK
  • TNXP +10%; says FDA meeting confirms that a single-study NDA approval of TNX-102 SL for treatment for treatment of PTSD could be possible

Stock LAGGARDS

  • AFSI -20%; as probe focus includes accounting practices – WSJ https://goo.gl/4kb422
  • AVGR -45%; downgraded to hold at Canaccord and cut tgt to $1 from $4.30 following the negative Q1 pre-announcement and significant planned reductions in the workforce
  • HUBG -14%; after issuing profit warning citing soft pricing and downgraded at KeyBanc
  • PTCT -1%; CFO to leave company to join RBC Capital
  • SEAC -3%; after Q1 EPS loss guidance wider than estimates
  • UAL -4%; on continued fallout of video of passenger being dragged off overcrowded flight

Syndicate

  • Axovant Sciences (AXON) 6.742M share Spot Secondary priced at $18.54
  • Azul SA (AZUL) 85.44M share IPO priced at $20.06
  • Cytori Therapeutics (CYTX) 8.6M share Spot Secondary priced at $1.10

 

Market commentary provided by Hammerstone Markets, a division The Hammerstone Group, a firm separate from and not affiliated with Regal Securities L.P. Regal Securities L.P. has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

Live Trading

Open an Account

Paper Trading

Register