Morning Quant Ride Feb 15, 2018

Feb 15, 2018

Traders’ Corner

Asian markets closed higher earlier this morning following the rally in US equities yesterday. The Nikkei 225 finished up 1.47% with tech, financials, consumer discretionary and healthcare stocks driving up the benchmark Japanese index. The Topix, a broad market index for Japanese equities, finished up 0.98%. In China and Hong Kong, the CSI 300 finishe dup 0.80% while the Hang Seng China Enterprise index was up 2.24%. The Hong Kong benchmark, the Hang Seng, finished up 1.97%. Tech, energy and financials stocks were the outperforming sectors in Chinese and Hong Kong markets. In the land Down Under, the ASX 200 finished up 1.16% with materials, energy and utilities stocks leading the move in Aussie equities. Macro-economic data in Australia was positive with the unemployment rate falling to 5.5%.

 

European equities are rallying across the board with the pan-European Euro Stoxx 600 up 77 bps while regional indices like the FTSE 100, DAX and CAC 40 are up 0.49%, 0.63% and 1.4% respectively. Materials, industrials and financials are driving the move in European equities this morning. Defensive sectors like food & beverage, utilities and real estate stocks are underperforming this morning.

Yesterday, US Equity markets rallied yesterday following the release of January 2018 inflation results. Inflation rose faster than expected, sending the dollar lower against the major currencies. US Small-Caps outpaced Large Caps, with the Russell 2000 gaining 1.82%, while the S&P 500 rose by 1.34%. Most sectors were positive in the S&P 500 with Financials, Tech and Consumer Discretionary leading the index higher, while Utilities, Telecom, and Real Estate lagged. As a measure of sentiment, the advance/decline ratio was skewed to advances with 410 stocks in the S&P500 advancing to 94 stocks declining.

US 10-year yields are trading at a 6-month high following yesterday’s release of US CPI for January. Yields moved from 2.80% before the CPI release to 2.93% currently. Currency and rate markets appear to be disconnected with US 2-year swaps expanding 10 bps this morning while the US Dollar index continues its downward trends. Widening interest rate differentials should strengthen the USD$, not weaken it…unless there are serious concerns about inflation breaking out to the upside. At the moment, we don’t see any data points which would support that thesis. JPY strength continues with the JPY spot now below 106. Oil markets appear to consolidating around USD$60/barrel for WTI.

This morning, US equity futures are pointing to a continuation in the rally in US equities with front-month S&P500 futures up 38 bps. The VIX is down to 18.96 which options markets recovering from the volatility shock earlier in the month. The VIX futures curve appears to be normalizing as it has shifted back to a state of contango. After the February 2018 futures were rolled out of the VXX yesterday, expect to see sharper downward pressure in “long” VIX ETPs as the curve further normalizes. Following yesterday's rally in US stocks, we are watching a few of our A-rated stocks that lagged yesterday:

Biogen Inc - 20.10% off its 52wkH, reports earnings on 04/26/2018

QuantShot: Comcast Corp - 10.39% off its 52wkH, reports earnings on 04/26/2018

QuantShot: Cirrus Logic - 41.24% off its 52wkH, reports earnings on 05/03/2018

QuantShot: Home Depot - 11.04% off its 52wkH, reports earnings on 02/20/2018

QuantShot: International Paper - 12.79% off its 52wkH, reports earnings on 04/26/2018

QuantShot: Pfizer Inc - 10.75% off its 52wkH, reports earnings on 05/01/2018

QuantShot: Thor Industries - 18.89% off its 52wkH, reports earnings on 03/08/2018

United Rentals - 11.62% off its 52wkH, reports earnings on 04/18/2018

QuantShot: Vishay Intertechnology - 26.83% off its 52wkH, reports earnings on 05/02/2018

Our Top Picks in the News

Click headline for story

Home Depot (HD)

Home Depot Earnings Preview: What's on Tap (Motley Fool)

Top Conviction Long in February, please see Quantamize Global Top Picks US Consumer Discretionary report

See more on our Home Depot QuantShot company report from January 11th

Pfizer (PFE)

3 Reasons to Be Bullish on Pfizer Inc. Stock (InvestorPlace)

Top Conviction Long in February, please see Quantamize Global Top Picks US Large Cap report

See more on our Pfizer QuantShot company report from February 14th

UnitedHealth (UNH)

UnitedHealth Group declares $0.75 dividend (Seeking Alpha)

Top Conviction Long in February, please see Quantamize Global Top Picks US Large Cap report

See more on our UnitedHealth QuantShot company report from February 6th

Tesla Inc (TSLA)

Tesla's plans to manufacture in China stuck in neutral (Seeking Alpha)

Top Conviction Short in February, please see Quantamize Global Top Picks US Large Cap report

See more on our Tesla QuantShot company report from February 6th

Domino's Pizza (DPZ)

Oppenheimer confident on Domino's Pizza ahead of earnings (Seeking Alpha)

Top Conviction Buy in February, please see Quantamize Global Top Picks US Consumer Discretionary report

See more on our Domino's QuantShot company report from February 9th

Union Pacific (UNP)

Citi sees Union Pacific as underappreciated (Seeking Alpha)

Top Conviction Buy in February, please see Quantamize Global Top Picks US Industrials report

See more on our Union Pacific QuantShot company report from February 12th

Cisco Systems (CSCO)

Cisco Jumps 6% After Hiking Dividend, Adding $25B to Buybacks (Barron's)

Top Conviction Buy in February, please see Quantamize Global Top Picks US Large Cap report

See more on our Cisco QuantShot company report from February 6th

Global Indices

Index

Levels

1 Day Return

5 Day Return

MTD

YTD

S&P 500

2698.63

0.00%

-4.97%

-5.03%

0.30%

Russell 2000

1522.10

0.00%

-4.55%

-4.25%

-1.79%

DJ Industrial Average

24893.49

0.00%

-4.94%

-4.80%

0.70%

NASDAQ Composite Index

7143.62

0.00%

-4.52%

-4.85%

2.15%

CBOE Market Volatility Index

18.82

-

-

-

-

Germany DAX (TR)

12393.38

0.44%

-3.18%

-5.59%

-2.53%

France CAC 40

5229.63

1.25%

-3.64%

-4.82%

-1.07%

Japan Nikkei 225

21464.98

1.47%

-7.84%

-5.23%

-4.92%

Hang Seng Index

31115.43

1.97%

-7.10%

-7.41%

1.35%

Hang Seng China Enterprises

12535.51

2.24%

-7.45%

-8.71%

6.18%

S&P ASX 200

5909.00

1.16%

-3.50%

-2.43%

-3.10%

Source: FactSet          

Large Cap Conviction Buy Movers

Large Cap A Winners Ticker Sector Industry 1 Day Return 5 Day Return YTD
UNITED THERAPEUTICS CORP UTHR Health Care Biotechnology

6.00%

-2.33%

-12.69%

ALIGN TECHNOLOGY INC ALGN Health Care Health Care Equipment & Supplies

5.40%

-0.26%

5.19%

ZIONS BANCORPORATION ZION Financials Banks

4.91%

-3.81%

2.22%

RH RH Consumer Discretionary Specialty Retail

4.22%

-2.30%

3.00%

PRUDENTIAL FINANCIAL INC PRU Financials Insurance

4.10%

-3.85%

-7.04%

Large Cap A Losers Ticker Sector Industry 1 Day Return 5 Day Return YTD
BIOGEN INC BIIB Health Care Biotechnology

-6.60%

-3.03%

-0.50%

LOUISIANA-PACIFIC CORP LPX Materials Paper & Forest Products

-1.25%

8.79%

15.96%

BLACK HILLS CORP BKH Utilities Multi-Utilities

-1.03%

1.00%

-12.99%

FISERV INC FISV Information Technology IT Services

-0.41%

6.94%

5.48%

CERNER CORP CERN Health Care Health Care Technology

-0.43%

-1.56%

-7.27%

Source: FactSet            

Large Cap Conviction Short Movers

Large Cap F Winners Ticker Sector Industry 1 Day Return 5 Day Return YTD
OMEGA HEALTHCARE INVS INC OHI Real Estate Equity Real Estate Investment Trusts (REITs)

-5.01%

3.14%

-2.11%

HCP INC HCP Real Estate Equity Real Estate Investment Trusts (REITs)

-4.52%

-2.48%

-12.58%

LONGFIN CORP -REDH LFIN Financials Capital Markets

-3.62%

28.85%

-25.03%

DYNAVAX TECHNOLOGIES CORP DVAX Health Care Biotechnology

-2.33%

-3.10%

-8.02%

ADT INC -REDH ADT Industrials Commercial Services & Supplies

-1.73%

-2.88%

-
Large Cap F Losers Ticker Sector Industry 1 Day Return 5 Day Return YTD
NEKTAR THERAPEUTICS NKTR Health Care Pharmaceuticals

11.02%

-1.19%

26.69%

PUMA BIOTECHNOLOGY INC PBYI Health Care Biotechnology

10.95%

0.49%

-37.63%

FITBIT INC FIT Information Technology Electronic Equipment, Instruments & Components

9.39%

-2.67%

-10.51%

CNX RESOURCES CORPORATION CNX Energy Oil, Gas & Consumable Fuels

9.15%

12.76%

-8.82%

ARMO BIOSCIENCES INC -REDH ARMO Health Care Biotechnology

8.47%

-3.21%

-
Source: FactSet            

Upcoming Earnings

Company Name Ticker Earnings Date
Zoetis, Inc. Class A ZTS 02/15/2018
Cisco Systems, Inc. CSCO 02/15/2018
Pilgrim's Pride Corporation PPC 02/15/2018
NetApp, Inc. NTAP 02/15/2018
Marriott International, Inc. Class A MAR 02/15/2018
V.F. Corporation VFC 02/16/2018
SS&C Technologies Holdings, Inc. SSNC 02/16/2018
Ligand Pharmaceuticals Incorporated LGND 02/21/2018
HP Inc. HPQ 02/21/2018
Zebra Technologies Corporation Class A ZBRA 02/22/2018
Toro Company TTC 02/22/2018
Pinnacle Foods, Inc. PF 02/22/2018
PRA Health Sciences, Inc. PRAH 02/22/2018
Leucadia National Corporation LUK 02/26/2018
NuVasive, Inc. NUVA 02/27/2018
Scripps Networks Interactive, Inc. Class A SNI 02/27/2018
United Therapeutics Corporation UTHR 02/27/2018
Priceline Group Inc PCLN 02/28/2018
Carter's, Inc. CRI 02/28/2018
TJX Companies Inc TJX 02/28/2018

Line for QuantShots

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