Morning Quant Ride Mar 2, 2018

Mar 02, 2018

Traders’ Corner

Asian & Australia Equities Recap

 

Asian markets closed down across the board with all major indices down on worries of potential trade war.  The Nikkei 225 finished down 2.25% with telecom, consumer discretionary and tech stocks the largest underperformers.  Financials, consumer staples, real estate and energy stocks outperformed the Nikkei 225.  Chinese markets were down in sympathy with the Hang Seng down 1.48%; CSI 300 and Hang Seng China Enterprise index both closed in the red, down 0.81% and 1.81% respectively.  Total volume traded trends in Japanese equities continues to trend above its short-term average while total volume traded in Chinese and Hong Kong exchanges remains below their 10-day averages.  Overnight, the Bank of Japan Chairman Haruhiko Kuroda suggested that the BOJ may consider tapering its quantitative easing strategy in early 2019.  In the Land Down Under, Aussie equities closed down in sympathy with Asian equity markets.  The ASX 200 finished the trading session -0.74%  with industrials, tech and telecom stocks the largest underperformers. The major iron ore miners all finished in the red with the drop in regional steel and iron prices. European Equities Recap

European equities are down with the Euro Stoxx 600 -1.46%.  Regional indices are down across the board as well with the FTSE100 down 0.92%, the CAC 40 down 1.66% and the DAX down 2.11%.  Auto & parts, materials and tech stocks are the major underperformers.  Consumer staples and real estate stocks are “relative” outperformers.  Macro-economic data coming out of Europe this morning is mixed though all of that is moot right now: traders are still digesting the announcement from the White House yesterday about introducing tariffs on steel and aluminum imports. Rates & Commodities Recap

US government bonds appear to be rallying on the risk-off sentiment in global equity markets: the yield on the 10-year has fallen to 2.808% as of the publication of this note.   Fed Funds futures continue to imply 3 rate hikes; the 2-day rally in government bonds appears less related to expectations for interest rates.  The US Dollar Index (DXY) is down 0.44% this AM with USD$ weakness against all major currencies.  The JPY¥ is currently below a 106 handle and appears headed towards 104.  The AUD$ is little changed against the USD$ which is a little unexpected given the Aussie Dollar’s sensitivity to commodities. Commodities markets are under pressure this morning with WTI heading towards USD$60/barrel.  In contrast to energy prices, industrial metals are mixed with Aluminum prices trading up against a sell-off in copper and nickel prices.  Precious metals are all positive this morning with spot Gold leading the rally, up 0.43%.  In February, we suggested our readers consider getting exposure to a rally in precious metals through gold miner stocks GDX 25/30 Bull Call Spread The convexity offered by this spread trade offers an effective hedge for uncertainty in equity and pro-cyclical asset classes.  Continued weakness in energy stocks may offer an attractive entry point for another of our favorite commodities trades: XOP 35/38 Bull Call Spread  As we have mentioned previously, with WTI above $60/barrel, US shale E&Ps continue to generate enough cash flow to cover the cost of production.  Our previous research suggests the total cash costs for US shale E&Ps is ~USD$40/barrel. Cryptocurrencies Recap

Cryptocurrencies markets are mixed this morning with only Bitcoin positive, up 2.50%.  The viability of Bitcoin as a payment service continues to be debated with transaction volume continuing to decelerate.  Unlike some of the new cryptocurrencies, the transaction speeds for Bitcoin remains a major hurdle for its mass adoption by retailers.  Wal-Mart announced it will be using Blockchain technology to help make package delivery smarter (for online orders).  US Markets Pre-Market Preview & Recap

US equity futures are pointing to a negative open in NY and a continuation of the global sell-off in equity markets.  The VIX currently is at 24.77 with implied volatility for 1-month options on the S&P 500, Russel 2000 and Nasdaq now more than 3 standard deviations above 1-year averages.  Yesterday, small-cap stocks outperformed large-caps, with the Russell 2000 down 0.33%, and the S&P 500 down 1.45%. All sectors of the S&P 500 were lower, with Industrials, Financials, and Tech stocks declining the most, while the defensive sectors outperformed. The Nasdaq outpaced S&P 500 Tech stocks, falling 1.27% and 1.70%, respectively. NRG Energy (NRG), Best Buy (BBY), and Envision Healthcare (EVHC) were the biggest gainers in the S&P 500 yesterday, while Patterson Companies (PDCO), Monster Beverage (MNST), and L Brands (LB) were the biggest laggards. Heritage-Crystal Clean (HCCI) and Veritiv Corp (VRTV) were two of the most notable gainers on the Russell 2000, while Portola Pharmaceuticals (PTLA) and Box Inc. (BOX) were two notable laggards. Shire PLC (SHPG) and Liberty Global PLC (LBTYK) were the biggest positive movers in the Nasdaq, while Monster Beverage (MNST) and Align Technology (ALGN) were the biggest negative movers. After yesterday’s pullback we are watching a few of our A-Rated stocks for March that fell yesterday:

QuantShot: AbbVie Inc. - 9.55% off its 52wkH, reports earnings on 04/26/2018

QuantShot: Campbell Soup Company - 29.46% off its 52wkH, reports earnings on 05/18/2018

QuantShot: Cognizant Technology Solutions Corporation - 3.75% off its 52wkH, reports earnings on 05/04/2018

DXC Technology Company - 3.88% off its 52wkH, reports earnings on 05/25/2018

Gentex Corporation - 7.06% off its 52wkH, reports earnings on 04/25/2018

Lear Corporation - 10.45% off its 52wkH, reports earnings on 04/27/2018

Louisiana-Pacific Corporation - 10.91% off its 52wkH, reports earnings on 05/04/2018

QuantShot: Pfizer Inc. - 9.64% off its 52wkH, reports earnings on 05/01/2018

Target Corporation - 5.81% off its 52wkH, reports earnings on 03/06/2018

Our Top Picks in the News

Click headline for story

Lowe's Companies (LOW)

Lowe's - Don't Be Fooled (Seeking Alpha)
Top Conviction Buy in February, please see Quantamize Global Top Picks US Consumer Discretionary report

 

See more on our Lowe's QuantShot company report from February 14th

Hilton Worldwide Holdings (HLT)

HNA Puts $1.4 Billion Stake in Hilton Spinoff Up for Sale (Yahoo Finance)
Top Conviction Buy in February, please see Quantamize Global Top Picks US Consumer Discretionary report

Pfizer Inc. (PFE)

Pfizer, Neofluidics enter collaboration (TheFly)
Top Conviction Buy in February, please see Quantamize Global Top Picks US Large Cap report

 

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

Amazon.com (AMZN)

Amazon to Offer Pay-Per-View Packages (Investopedia)
Top Conviction Buy in February, please see Quantamize Global Top Picks US Consumer Discretionary report

Kohl's Corporation (KSS)

Kohl's positive on earnings beat (Seeking Alpha)
Top Conviction Buy in February, please see Quantamize Global Top Picks US Consumer Discretionary report

 

See more on our Kohl's QuantShot company report from February 15th

Alibaba Group Holding (BABA)

Forget Amazon: Alibaba Is The Horse To Bet On In This Race (Seeking Alpha)
Top Conviction Buy in February, please see Quantamize Global Top Picks Investable China report

 

See more on our Alibaba QuantShot company report from December 5th

Global Indices

Index

Levels

1 Day Return

5 Day Return

MTD

YTD

S&P 500

2,677.67

0.00%

-2.53%

-1.33%

0.15%

Russell 2000

1,507.39

0.00%

-2.70%

-0.33%

-1.83%

DJ Industrial Average

24,608.98

0.00%

-2.77%

-1.68%

-0.45%

NASDAQ Composite Index

7,180.56

0.00%

-2.14%

-1.27%

4.02%

CBOE Market Volatility Index

24.34

-

-

-

-

Germany DAX (TR)

11,916.10

-2.25%

-2.35%

-4.18%

-5.63%

France CAC 40

5,164.14

-1.87%

-1.03%

-2.94%

-0.94%

Japan Nikkei 225

21,181.64

-2.50%

-0.77%

-4.02%

-4.57%

Hang Seng Index

30,583.45

-1.48%

-0.71%

-0.85%

3.76%

Hang Seng China Enterprises

12,203.91

-1.81%

-2.40%

-1.44%

6.15%

S&P ASX 200

5,928.90

-0.74%

-0.44%

-1.45%

-1.51%

Source: FactSet          

Large Cap Conviction Buy Movers

Large Cap A Winners Ticker Sector Industry 1 Day Return  5 Day Return YTD
Celanese Corporation CE Materials Specialty Chemicals

2.40%

-0.64%

-3.55%

United Parcel Service, Inc. UPS Industrials Air Freight and Logistics

1.93%

0.78%

-10.68%

LogMeIn, Inc. LOGM Information Technology Internet Software and Services

1.30%

-0.47%

2.23%

Encompass Health Corporation EHC Healthcare Healthcare Facilities

1.00%

1.45%

8.86%

Comcast Corporation CMCS.A Consumer Discretionary Cable and Satellite

0.91%

-7.49%

-8.76%

Large Cap A Losers Ticker Sector Industry 1 Day Return  5 Day Return YTD
Monster Beverage Corporation MNST Consumer Staples Soft Drinks

-14.44%

-17.70%

-14.44%

Discover Financial Services DFS Financials Consumer Finance

-4.59%

-5.30%

-4.59%

Lockheed Martin Corporation LMT Industrials Aerospace and Defense

-3.29%

-4.82%

-3.29%

Unum Group UNM Financials Life and Health Insurance

-3.24%

-4.68%

-3.24%

Expeditors International of Washington, Inc. EXPD Industrials Air Freight and Logistics

-3.00%

-3.83%

-3.00%

Source: Capital IQ            

Large Cap Conviction Short Movers

Large Cap F Winners Ticker Sector Industry 1 Day Return  5 Day Return YTD
Portola Pharmaceuticals, Inc. PTLA Healthcare Biotechnology

-25.43%

-31.12%

-25.43%

Menlo Therapeutics Inc. MNLO Healthcare Pharmaceuticals

-5.86%

-6.62%

-5.86%

Ionis Pharmaceuticals, Inc. IONS Healthcare Biotechnology

-5.55%

-2.23%

-5.55%

Puma Biotechnology, Inc. PBYI Healthcare Biotechnology

-5.51%

-9.52%

-5.51%

Roku, Inc. ROKU Consumer Discretionary Consumer Electronics

-5.03%

-6.74%

-5.03%

Large Cap F Losers Ticker Sector Industry 1 Day Return  5 Day Return YTD
The Medicines Company MDCO Healthcare Pharmaceuticals

8.65%

7.08%

21.69%

Pacira Pharmaceuticals, Inc. PCRX Healthcare Pharmaceuticals

4.47%

4.64%

-28.37%

NRG Energy, Inc. NRG Utilities Independent Power Producers and Energy Traders

4.10%

1.89%

-5.48%

Blueprint Medicines Corporation BPMC Healthcare Biotechnology

3.97%

2.25%

19.35%

Southwestern Energy Company SWN Energy Oil and Gas Exploration and Production

3.92%

-0.80%

-33.51%

Source: Capital IQ            

Upcoming Earnings

Company Name Ticker Earnings Date
Entercom Communications Corp. Class A ETM 03/08/2018
National Beverage Corp. FIZZ 03/08/2018
Cooper Companies, Inc. COO 03/09/2018
Darden Restaurants, Inc. DRI 03/22/2018
MSC Industrial Direct Co., Inc. Class A MSM 04/10/2018

Line for QuantShots

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