S&P NOTCHES RECORD CLOSE; DOW JONES INDUSTRIAL AVERAGE GRABS ANOTHER WIN

Investors are expecting major oil producers to extend their supply cuts tomorrow

The Dow Jones Industrial Average (DJIA) grinded higher for a fifth straight win, topping the 21,000 level, as investors digested minutes from the Fed's May meeting. Specifically, most Federal Open Market Committee (FOMC) members felt the next rate hike should come "soon," and agreed to begin unwinding the central bank's balance sheet. Stocks also shrugged off another round of weak housing data and a drop in oil prices, with attention now turning to tomorrow's Organization of the Petroleum Exporting (OPEC) meeting. Meanwhile, the S&P 500 Index (SPX) and Nasdaq Composite (COMP) followed the Dow higher, with the SPX notching an all-time closing high.

Continue reading for more on today's market, including:

3 industrial stocks with cheap options.
Why analysts don't expect much earnings volatility for this tech stock next week.
Behind the crazy options volume on red-hot BlackBerry stock.
Plus, the retail stock crushing shorts; pre-earnings options trading on GameStop; and the $4 billion Nvidia news.

The Dow Jones Industrial Average (DJIA - 21,012.42) rose 74.5 points, or 0.4%, to close near session highs. Of the Dow's 30 components, 17 closed higher, led by Goldman Sachs' 1.9% rise. General Electric, meanwhile, fell 1.6% to pace the losers.

The S&P 500 Index (SPX - 2,404.39) added 6 points, or 0.3%, for its best close on record. The Nasdaq Composite (COMP - 6,163.02) picked up 24.3 points, or 0.4%.

The CBOE Volatility Index (VIX - 10.02) fell 0.7 point, or 6.5%.

Items on Our Radar Today:
Police in Libya have reportedly arrested the father and brother of the Manchester bomber Salman Abedi. Meanwhile, Manchester police also arrested four other people which may be part of a broader "network." (USA Today)
In an interview with Reuters, Senate Majority Leader Mitch McConnell expressed doubt that the Senate could pass the Obamacare replacement bill. However, McConnell -- a Kentucky Republican -- said the chances for tax reform are "pretty good." (Reuters)
How this retail stock crushed short sellers.
Call buyers are swarming GameStop stock ahead of earnings.
The $4 billion news that boosted Nvidia stock.

Commodities

Oil prices gave back some of their recent gains today, ahead of tomorrow's OPEC meeting, as traders digested a smaller-than-expected drop in U.S. gasoline stockpiles. Crude inventories, meanwhile, fell by more than expected last week. Oil for July delivery closed down 11 cents, or 0.2%, at $51.36 per barrel.

Gold futures also fell today, as traders digested the Fed's meeting minutes that suggested a June rate hike was a strong possibility. Gold dated for June delivery closed down $2.40, 0.2%, at $1,253.10 per ounce.

Tiffany & Co. (TIF) Stock Bites the Dust on Earnings

Bulls or bears? Pick a side and get into TIF stock with these plays

Sometimes Tiffany & Co. (NYSE:TIF) doesn’t shine bright like a diamond … like today. Shares of the luxury jewelry company are down over 7% after earnings. Despite beating earnings-per-share estimates, TIF stock missed on revenue expectations due to weaker sales in America.

For a more in-depth breakdown of the Tiffany & Co earnings performance, check out “Tiffany & Co (TIF) Beats Estimates Despite Slower Americas Sales.”

For this article, let’s focus on the impact of today’s swoon on Tiffany’s stock chart. The magnitude of today’s gap was sufficient in reversing both the short-term and intermediate-term trends for TIF stock. At $86, shares now rest beneath the 20-day and 50-day moving averages.

Fortunately for Tiffany shareholders, bears have yet to wrest control of the longer-term trend. So, no need to abandon ship just yet if you’re holding TIF for the long haul. The 200-day moving average, currently perched at $81, is a good line in the sand to watch over the coming weeks. Provided we remain above it, this earnings oopsie should be considered a mere flesh wound.

Break below that level and, well, things turn nasty.

Intraday trading this morning has been quite volatile. TIF shares have rebounded well off their lows, which is a good sign

Divining direction on the day of a big gap is often a difficult gambit. Rather than punting, I’ll offer up a pair of trades for bulls and bears alike.

Pick Your TIF Stock Poison
Instead of going for the jugular with a straight call or put purchase, let’s hedge our bets by selling out-of-the-money credit spreads. These strategies provide a wider range of profit.

Bulls: If you think this morning’s bounce back is a positive omen for the stock, then sell the July $80/$75 bull put spread for around 50 cents. Provided the stock remains above $80 you’ll capture the max gain of 50 cents.

Bears: If you think today’s earnings worries will keep a lid on the stock for the next month, then sell the July $92.50/$95 call spread for 45 cents. You will pocket the max gain of 45 cents if TIF shares sit below $92.50 at expiration.

Trade Lowe’s Companies, Inc. (LOW) Stock After Its Earnings Miss

Join the LOW stock bears with this short options spread

Lowe’s Companies, Inc. (NYSE:LOW) shares are down heavy in early morning trading after reporting underwhelming earnings for the first quarter. The home improvement chain scored earnings per share of $1.03, which fell a few pennies short of analyst estimates. LOW stock’s forward guidance for full-year earnings also came in well below expectations.

Investors’ displeasure is on full display this morning as a flurry of “sell” orders are taking LOW down more than 4%. The plunge is shattering critical support levels, throwing a wrench into what was a decent uptrend.

Today’s smacking is carrying Lowe’s Companies shares into the heart of its previous earnings gap. From a charting perspective, we’re in the middle of no-man’s-land here. Potential support sits lower at $77.50 and $74.50. The former was an old resistance level. The latter would constitute a gap fill.

Both serve as logical downside targets if bears continue to press their advantage here. On the resistance side of the equation, $81 and $82 loom large. If Lowe’s Companies can claw its way back from today’s misstep, both levels make sense for upside targets.

Interestingly, today’s gap created a rare island reversal pattern. It’s as if anyone who purchased LOW stock over the past quarter just got marooned on an island. They’re all losing money, and due to the large down gap, they were robbed of any opportunity to exit at breakeven or a small loss.

Together, these losing longs create what’s known as overhead supply. This is the fundamental reason why the $81 and $82 levels have a good chance of becoming resistance when (or if) we rally back up there.

The LOW Trade
If you think LOW stock remains heavy over the coming weeks, sell the July $82.50/$85 bear call spread for 50 cents. The max gain is limited to the initial 50 cents credit and will be captured if the stock sits below $82.50 at expiration.

The max loss is limited to the spread width minus the 50-cent credit, or $2, and will be forfeited if the stock sits above $85 at expiration.

INTUIT, CONTAINER STORE, INOVIO PHARMACEUTICALS STOCKS MOVING TODAY

Container Store stock is at the top of the New York Stock Exchange today

The Dow is maintaining its lead after the Fed meeting minutes showed most central bankers were comfortable with issuing another rate hike "soon." Among the names making big moves are TurboTax parent Intuit Inc. (NASDAQ:INTU), retailer Container Store Group Inc (NYSE:TCS), and drug stock Inovio Pharmaceuticals Inc (NASDAQ:INO). Here's a quick look at what's moving shares of INTU, TCS, and INO.

INTU Stock Rockets to New Highs After Earnings

Intuit stock is roaring up the charts today, earlier hitting a record high of $140.25, last seen up 7.5% at $138.81. This comes after the company posted impressive fiscal third-quarter earnings and an upbeat full-year outlook. The shares are now up 32% over the past 12 months, and analysts are quickly raising their price targets. Several brokerage firms have weighed in since yesterday's close, including Credit Suisse and Barclays, which each issued price-target hikes to $150. There very well could be additional bullish notes coming through in the near future, too, since just five of 14 brokerage firms recommend buying INTU stock.

TCS Stock Surges on Restructuring Plan

Container Store stock is also rallying after earnings, up 28.9% at $5.35, making it the top percentage gainer on the NYSE at last check. The company also announced a restructuring plan to improve profitability. The shares are on pace for their first close above their 200-day moving average since mid-January, and they're back in positive year-over-year territory. Today's price action is crushing short sellers, who control 3.4 million shares -- or 27 times the average daily trading volume for TCS stock.

INO Stock Up Big After HIV Vaccine Results

Inovio Pharmaceuticals stock has gapped atop its 200-day moving average, as well, surging 25.2% to $8.93, thanks to promising study results for the company's HIV vaccine. A price-target hike to $12 from $10 at Maxim is only stoking the bullish flames. Despite the huge move, INO shares remain well below their 52-week high of $11.62 from June. Meanwhile, it's an excellent time to buy premium on short-term INO options.

GAMESTOP OPTIONS RED-HOT AHEAD OF EARNINGS

GME will report its quarterly results after tomorrow's close

GameStop Corp. (NYSE:GME) is scheduled to report first-quarter earnings after tomorrow's close. GME stock has a history of negative post-earnings reactions, closing lower in the session subsequent to reporting in six of the last eight quarters. In late March, for instance, GME stock took a 13.6% post-earnings plunge to trade near the four-year low it hit in early November the day after reporting preliminary numbers. This time around, the options market is pricing in a 13.9% swing for Friday's trading, regardless of direction.
Short-Term GME Options Traders Like Calls

Despite the stock's mostly bearish post-earnings history, short-term GME options traders are more call-skewed now than they've been at any other point during the past year. This is based on the security's Schaeffer's put/call open interest ratio (SOIR) of 1.02, which is ranked below all other comparable readings taken in the past year.

The June 26 and July 24 calls are GME stock's two largest open interest positions, with nearly 13,700 contracts collectively in residence. Trade-Alert confirms a bulk of the activity at these out-of-the-money strikes was a result of new positions being purchased, meaning options traders are anticipating a move north of the strikes through the respective expiration dates. However, almost 21% of GME's float is sold short, so it's possible these bearish bettors have been hedging against any upside risk.

GME Put Options Have Been Popular, Too

In fact, there's been plenty of bearish options activity happening, too. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 15,330 puts have been bought to open in the past two weeks, compared to 5,842 calls. The resultant call/put volume ratio of 2.62 ranks in the slightly elevated 66th annual percentile.

Drilling down, GME's weekly 5/26 22-strike and June 26 puts have seen notable buy-to-open activity over this 10-session time frame. While the June 26 puts appear tied to stock, the buyers of the lower-strike puts expect GME stock to retreat to levels not seen since early April by this Friday's close, when the weekly series expires.
GME Stock Staring at Stiff Technical Resistance

Today, GME options volume is accelerated, with 9,117 calls and 3,604 puts on the tape -- 1.8 times what's typically seen at this point in the trading session. Most active is Gamestop's July 25 call, though it looks like options traders may be selling to open new positions here. If this is the case, the goal is for $25 to serve as a ceiling for GME stock over the next two months. This level currently coincides with the security's 200-day moving average, a trendline that has contained recent rallies and helped usher GME to a 21.5% year-over-year loss, last seen at $22.53.

3 INDUSTRIAL STOCKS WITH CHEAP OPTIONS

The "Machinery Tools" sector has been outperforming


Our internal sector scorecard, compiled weekly by Schaeffer's Senior Quantitative Analyst Rocky White, helps identify underloved sectors for our contrarian trading strategy. Ideally, we're looking for sectors that have been performing well from a technical standpoint, yet pessimism remains high. This time around, the "Machinery Tools" sector was near the top of the list, likely thanks to a recent after-earnings rally from Deere stock. After taking a closer look at the sector, three stocks that could present prime opportunities for options traders are Dover Corp (NYSE:DOV), Terex Corporation (NYSE:TEX), and Snap-on Incorporated (NYSE:SNA).
DOV Stock Finds Chart Support

Since the beginning of the year, Dover stock has seen strong support from the $76 area, which is a 61.8% Fibonacci retracement of its descent from record highs in July 2014 to its January 2016 bottom. In fact, DOV shares have been trending higher since hitting that multi-year low, touching a two-year high of $84.40 on May 22. Last seen trading at $83.47, the equity sports a year-over-year advance of 25.2%.

Options data reveals bearish tendencies from traders, though. Dover has a 10-day put/call volume ratio of 2.67 across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks above 66% of readings from the past year. This pessimism could unwind and act as an upside catalyst for the shares.

Bearish or bullish, it's a good time to buy DOV options, based on the stock's Schaeffer's Volatility Index (SVI) of 20%, which stands just 3 percentage points from an annual low. This means near-term options are inexpensive, from a historical volatility standpoint.

Short-Term TEX Options Are Relatively Cheap at the Moment

Terex stock has added almost 35% over the past year to trade near $34, touching a more than two-year high of $36.43 on April 25. More recently, TEX shares have found strong support from their 50-day moving average, as well as their year-to-date breakeven mark.

Options traders have remained bearish, however. The stock has a 10-day put/call volume ratio of 1.62 across the ISE, CBOE, and PHLX, outranking 78% of comparable readings from the past 52 weeks. Meanwhile, near-term TEX options are offering an affordable buying opportunity, based on Terex stock's SVI of 32% -- just 18 percentage points from an annual low.

Short Interest Builds on SNA Stock

Finally, Snap-on stock has pulled back from its early 2017 record highs, but seems to be finding support from the familiar $160-$162 area -- a region that served as a ceiling throughout most of 2016. This level is also home to SNA's 320-day moving average. At last check, the stock was trading at $162.29.

Like its sector peers, put buying has been popular on SNA, albeit amid relatively low absolute volume. The shares have a 10-day put/call volume ratio of 1.77 across the major options exchanges, good enough to rank in the 70th annual percentile. This skepticism is seen outside of the options pits, too, with short interest up 30% since February to 3.5 million shares, or 4 times SNA stock's average daily trading volume. A capitulation from some of the weaker bearish hands could boost the stock.

There's rarely been a better time to buy options during the past year, too. Snap-on stock has an SVI of 18%, which ranks in just the 8th percentile of its annual range.

BLACKBERRY STOCK RALLY HAS SPARKED CRAZY OPTIONS VOLUME

BBRY short sellers are feeling the heat

The shares of smartphone and software maker BlackBerry Ltd (NASDAQ:BBRY) have been on a major tear lately, rallying more than 50% in just the past three months. BBRY stock notched a two-year high of $11.39 just yesterday, with analysts attributing the gains to optimism about BlackBerry's future in the cybersecurity and automotive markets. What's more, options traders -- particularly those bullish on BlackBerry -- are more riled up than ever, with BBRY calls flying off the shelves in recent weeks.
Options Volume Hits New High as BBRY Stock Rallies

BBRY call volume topped 110,000 contracts on Monday -- the highest point in at least two years. Total options volume also hit a new high, with more than 132,000 BBRY options traded that day, and the stock's 30-day at-the-money implied volatility peaked at 59.4%. BlackBerry put volume, on the other hand, peaked at a relatively paltry 24,500 contracts just last week, on May 16 -- just a couple of weeks after touching an annual low of 146 puts on May 2.

Are BBRY Shorts Buying Long-Term Calls?

During the past week, the January 2018 7-strike call was the most active, though open interest declined at the strike, suggesting many traders took profits and sold to close their in-the-money calls. The most added BlackBerry options were also in the January 2018 series, led by the 16-strike call, with roughly 10,400 new contracts. The January 2018 13- and 15-strike calls took the silver and bronze, respectively, with about 8,800 and 8,200 contracts added in the last week. It's difficult to tell whether the contracts were bought or sold to open, but assuming they were purchased by "vanilla" option bulls, the traders are expecting BBRY stock to extend its rally over the next several months.

However, it's entirely possible that the long-term calls were purchased by short sellers feeling the heat. Short interest on BlackBerry declined by nearly 23% in the most recent reporting period, but still accounts for a healthy 9% of the stock's total available float. At BBRY stock's average daily trading volume, it would take nearly six sessions to repurchase these pessimistic positions. Against this backdrop, shorts could be buying out-of-the-money calls as options insurance.
Short Squeeze, Upgrades Could Push BBRY Stock Higher

As alluded to earlier, BBRY shares have been unstoppable lately, soaring more than 66% since hitting $6.66 in March. The stock today was last seen 2.2% lower at $11.06, though that's not too surprising, considering BlackBerry's 14-day Relative Strength Index (RSI) sits well into overbought territory, at 85. From an Expectational Analysis® standpoint, BBRY could have more gas in the tank; a short squeeze or a flood of well-deserved upgrades could propel the shares even higher. Currently, BBRY boasts just three "buy" or better ratings, compared to nine "hold" or "sell" recommendations.

DOW JONES INDUSTRIAL AVERAGE TRADES HIGHER; FED ON TAP

The Dow, SPX, and COMP are all on track for a fifth straight win

The Dow Jones Industrial Average (DJIA) has traded in a slim 50-point range ahead of this afternoon's release of the Fed's meeting minutes, which Wall Street will dissect for hints of a possible June rate hike. Most recently, the Dow was trading higher -- on track to extend its winning streak to five sessions. A larger-than-expected drop in existing home sales, which echoes Tuesday's disappointing housing data, has done little to contain stocks, with the S&P 500 Index (SPX) and Nasdaq Composite (COMP) also taking aim at a fifth straight daily win.

Continue reading for more on today's market -- and don't miss:

Analyst: Tesla stock could hit $500.
The latest retail stocks to spiral after earnings.
Plus, call traders blast Foot Locker; HIV data sparks a fire under INO stock; and the energy stock down 33%.

Among the stocks with unusual options activity is athletic apparel retailer Foot Locker, Inc. (NYSE:FL), with nearly 10,350 calls traded -- 16 times the average intraday rate, and volume on track to settle in the 100th annual percentile. By comparison, just 550 puts have changed hands. Most of the action is due to the initiation of a possible calendar spread with long June 62.50 calls and short July 65 calls. At last check, FL stock was trading down 0.6% at $59.51, extending Friday's post-earnings downside.

Inovio Pharmaceuticals Inc (NASDAQ:INO) is near the top of the Nasdaq leader board, after the drugmaker reported upbeat preliminary data for its HIV vaccine. INO stock has jumped 28.6% to trade at $9.17 -- breaking out above recent congestion at its 200-day moving average.

Aegean Marine Petroleum Network Inc. (NYSE:ANW) is the biggest decliner on the New York Stock Exchange (NYSE), after the fuel logistics firm's dismal earnings report was met with a downgrade at Stifel. At last check, ANW stock was trading down 33.3% at $7.00, levels not seen since last August.

Trade Lowe’s Companies, Inc. (LOW) Stock After Its Earnings Miss

Join the LOW stock bears with this short options spread

Lowe’s Companies, Inc. (NYSE:LOW) shares are down heavy in early morning trading after reporting underwhelming earnings for the first quarter. The home improvement chain scored earnings per share of $1.03, which fell a few pennies short of analyst estimates. LOW stock’s forward guidance for full-year earnings also came in well below expectations.

Investors’ displeasure is on full display this morning as a flurry of “sell” orders are taking LOW down more than 4%. The plunge is shattering critical support levels, throwing a wrench into what was a decent uptrend.

Today’s smacking is carrying Lowe’s Companies shares into the heart of its previous earnings gap. From a charting perspective, we’re in the middle of no-man’s-land here. Potential support sits lower at $77.50 and $74.50. The former was an old resistance level. The latter would constitute a gap fill.

Both serve as logical downside targets if bears continue to press their advantage here. On the resistance side of the equation, $81 and $82 loom large. If Lowe’s Companies can claw its way back from today’s misstep, both levels make sense for upside targets.

Interestingly, today’s gap created a rare island reversal pattern. It’s as if anyone who purchased LOW stock over the past quarter just got marooned on an island. They’re all losing money, and due to the large down gap, they were robbed of any opportunity to exit at breakeven or a small loss.

Together, these losing longs create what’s known as overhead supply. This is the fundamental reason why the $81 and $82 levels have a good chance of becoming resistance when (or if) we rally back up there.

The LOW Trade

If you think LOW stock remains heavy over the coming weeks, sell the July $82.50/$85 bear call spread for 50 cents. The max gain is limited to the initial 50 cents credit and will be captured if the stock sits below $82.50 at expiration.

The max loss is limited to the spread width minus the 50-cent credit, or $2, and will be forfeited if the stock sits above $85 at expiration.

WHY SKYWORKS STOCK IS A CALL BUYER'S DREAM

SWKS just closed below its 20-day moving average, creating an ideal entry point for a bullish call trade

As a designer and developer of semiconductor products, Skyworks Solutions Inc (NASDAQ:SWKS) was considered until recently to be a member of a vast cadre of technology operations known collectively as "Apple suppliers." But the company has begun to reap the rewards of a concerted effort to broaden its customer base. So while it is common knowledge that iPhone sales have started to plateau, SWKS has reported solid results from its partnerships with the likes of Samsung and Huawei, which provide a sizable foothold in the growing Chinese smartphone market.

While it surprised us that the resounding earnings beat reported by SWKS in late April was met with some selling (in marked contrast with the earnings-based surge in January), our view is that this represents another opportunity to accumulate positions in SWKS call options based on the ongoing technical and sentiment picture as discussed below.

It's no coincidence that we've highlighted the 20-day and 50-day moving averages on the accompanying six-month SWKS chart. The performance of SWKS this year relative to these shorter-term moving averages has been remarkable -- and enormously conducive to the establishment of bullish positions through the purchase of call options. Since Jan. 9, SWKS has not once closed below its rising 50-day moving average, and has closed on just a half-dozen occasions below its 20-day. So call option buyers have been assured this year -- to a much greater extent than is typical in this market -- that SWKS shares will trade predominantly to the upside over the relatively short time frames demanded in order for option trades to be successful.

Perhaps of even greater interest, as it relates to the timing for our recommendation of this SWKS call, is that the brief periods this year over which SWKS has traded below its 20-day moving average have represented outstanding "points of entry" on the long side. For example, SWKS closed below its 20-day (at $95.52) on March 21, and 13 trading days later the shares had rallied by 7.5% (to $102.64). SWKS next closed below its 20-day (at $95.59) on April 12 -- just ahead of a rally that peaked at $103.91 (for a gain of 6.5%) over the subsequent six trading days. To which we'd now add that the most recent close by SWKS below its 20-day (at $100.55) occurred just this past Wednesday. And while there is no guarantee of another such quick 6-7% gain, we consider this SWKS call position entry to be potentially quite timely.

Overlaid on this short-term consistency to the upside is some equally remarkable longer-term consistency. For a period encompassing 2016's fourth quarter (plus the first part of January 2017), the year-over-year gains in SWKS share prices deviated very little from the 20% level. But after the much-heralded January 2017 earnings report, year-over-year gains have steadily increased from about 40% to the current level of 60%. Furthermore, this feat has been accomplished under conditions of steadily declining share volatility. In fact, realized volatility for SWKS has been cut in half over the past 15 months, from the 40% annual rate that prevailed for most of the first quarter of 2016 to the current level of about 20%.

Those who sell "naked put options" are generally very pleased when share volatility is slashed by 50% over a period of flat to slightly higher stock prices. But when such a volatility implosion accompanies annualized share price gains in excess of 50%, call option buyers can benefit from enormous gains -- as their cost (in terms of option premium level) steadily declines, even as share price appreciation is accelerating.

Based on this impressive combination of strong price action and ever-cheapening option premium levels, one would think open interest in SWKS call options would now be at runaway high levels as more players become "woke" to the ongoing attractiveness of the "buy SWKS calls" strategy -- but one would be very wrong. In fact (per Trade-Alert), current SWKS call open interest of 49,442 contracts is lower than 85% of such readings over the past year, and is less than a third of the 12-month peak in call open interest of 160,791 contacts (reached in October 2016). And as full-throated contrarians, we greatly approve of this evidence of option speculator skepticism as carrying demonstrably bullish implications for further upside in the shares (at some point to be fueled by additional call accumulation).

Our recommended SWKS call option would achieve its target profit of 200% on a rally by SWKS into the low-120s -- the upper end of the potential overhead resistance levels as listed on our chart. And we view the chances for such a robust rally (over the recommended holding period) as significantly more elevated than are the collective opinions as expressed by the actions of "the trading crowd."

Trade Facebook Inc (FB) Stock for 900% Profits

Bulls have to like this unique trade in FB stock right now

Some investors have unfriended Facebook Inc (NASDAQ:FB) since its first-quarter earnings report, but the trend is starting to look more friendly toward the bulls. Traders willing to forgo a bit of instant gratification could be rewarded with a big pot of gold, though. I have a smarter, safer way to participate in a rebound in FB stock that can also deliver big profits.

Let’s take a look.

Earlier this month, Facebook stock received the “sell the news” treatment from investors after it reported Q1 results. The good news? FB easily topped sales and profit forecasts. Even better, Facebook’s monthly average users (MAUs) grew by a stronger-than-expected 4.3%, and should reach a staggering 2 billion users by Q2.

And what about the competition?

While the days of easy mobile growth may be over, Facebook’s WhatsApp product launched only a couple months back has already surpassed Snap Inc.’s (NYSE:SNAP) popular Snapchat app with 175 million daily users.

Facebook isn’t stopping there, either. The social media platform continues to dominate with apps such as Facebook Lite aimed at developing countries, as well as Instagram. New features such as Messenger Day and Facebook Stories are showing early strength, too, and Facebook is on track to continue distancing itself from the competition.

Thus, the post-earnings reaction in FB stock has been curious at best. But that price action has made the stock look more likable for new positions.

FB Stock Chart
A look at Facebook’s weekly chart leaves little doubt that the trend is up. In fact, a series of higher highs and higher lows extends for roughly three years.

However, everything isn’t perfectly positive.

Heading into the early May earnings report, Facebook shares were pressing against a longstanding channel line that had done a fair job of alerting traders to counter-trend pullbacks and corrections.

Personally, I was wary of the price action in FB stock and expected lower prices to prevail in the short-term. In fact, I wrote as much back on April 26, along with a creative way to buy shares $138 at no cost if they pulled back as anticipated.

Technically, I was wrong. Facebook proceeded to rally through the channel line over the next few sessions in front of the earnings report.

The earnings beat itself, as mentioned above, resulted in a “sell the news” reaction. But now, the stock has consolidated over the past couple weeks and established a 6% correction. The current pullback pattern could be the pause that refreshes.

The price contraction looks more compelling with last week’s test and bullish reversal of the 50-day simple moving average. But considering that stochastics look less than friendly with an overbought crossover signaling, I would prefer to approach FB stock with a limited-risk spread rather than buying shares outright.

Here’s how.
How to Trade FB Stock
Last time, the proffered modified long put butterfly spread ended up as a wash as Facebook remained above $138 through expiration of the shorter-term options position.

Right now, given Facebook’s solid earnings report and decent correction pattern, I’d like to suggest a bullish modified fence. We’ll package a bull put spread and long bull call vertical. This strategy allows the investor to potentially buy Facebook on additional price weakness with limited risk. At the same time, the position can also participate and profit in a rally in FB stock.

Reviewing Facebook’s options, I suggest selling the weekly 23 June $144/$143 put spread and simultaneously buying the 23 June $152.50/$155 call vertical for a combined debit of 25 cents is interesting.

What’s this packaged combination do?

On the downside, risk is limited to $1.25 below $143 in FB stock. The flip side is that the bull put spread allows flexibility to buy pullbacks with completely risk control.

Between the $144 put strike and $152.50 call strike, at expiration, both spreads are worthless and the trader would be out the 25-cent debit. However, as this combination is long deltas during the life of the position, if FB stock starts to rally, paper profits could potentially build inside this range.

Lastly, and most lucratively, if Facebook does find a bit, this position holds the $152.50/$155 bull call spread for a below-market price of 25 cents. If investors take FB to fresh highs by expiration, above $155, you can pocket $2.25 in profits.

That’s 900% for a move of less than 5%.

Don’t Yield to the General Electric Company (GE) Stock Bears

Fears of General Electric (GE) cutting its dividend are overblown

It has been a rough year for General Electric Company (NYSE:GE). After surging into the end of 2016 on the wings of the Trump bump, GE stock has shed nearly 11% so far in 2017, pushed lower by a pair of back-to-back earnings misses.

Once a paragon of the buy-and-hold era due to its stable dividend yield, GE stock now finds itself in a state of flux, attempting to innovate and lead the industrial Internet of Things revolution.

But, according to recent analyst concerns, that yield and stability may now be at risk.

Last week, Deutsche Bank downgraded GE stock from “hold” to “sell.” It was just the latest in a string of downgrades from the analyst community. Deutsche Bank’s downgrade was different, however, as the brokerage firm called into question GE’s dividend. According to Deutsche Bank, GE would have to cut its dividend of 24 cents per share and lower its earnings guidance for the next few years.

Fallout from the move sent GE stock plunging to a fresh 52-week low near $27, as traders, already battered by earnings disappointments, fled the shares. It was at this point that technical buyers stepped in. GE stock was heavily oversold, and the shares proceed to recover just as quickly as they had declined.

It was a buying moment for GE stock, and that moment is not over quite yet, as the shares have reclaimed support at $28 and their 20-day moving average

Sentiment remains somewhat shaky, but not as bad as Deutsche Bank is making things out to be. Currently, Thomson/First Call reports that 10 of the 16 analysts following GE stock rate the shares a “buy” or better. Furthermore, the 12-month price target of $32.29 represents a healthy premium of about 14.2% for GE stock.

GE options traders, meanwhile, remain largely on the fence when it comes to the stock’s prospects. Currently, the June put/call open interest ratio rests at 0.82, with calls only just outnumbering puts among options set to expire within the next month. That said, most of this OI rests north of $30, indicating that many of these contracts were likely opened before Deutsche Bank send GE stock reeling.

Overall, June implieds are pricing in a potential move of about 2.5% for GE stock ahead of expiration. This places the upper bound at $29, with the lower bound coming in near $27.50. This may seem like a tight trading range for GE stock, but implieds are well above historicals, indicating that volatility is elevated at the moment for the shares.

2 Trades for GE Stock

Put Sell: The safest route for profit from GE stock options is to sell out-of-the-money puts — especially with General Electric recovering from a heavily oversold position. Those looking to take advantage of near-term technical support might want to consider a June $27 put sell position. At last check, this put was bid at 17 cents, or $17 per contract. On the upside, traders will keep the initial premium received as long as GE stock closes above $27 when June options expire. The downside is that should General Electric trade below $27 ahead of expiration, traders could be assigned 100 shares for each sold put at a cost of $27 per share.

Call Spread: Those looking to bet on a continued oversold rebound for GE stock might want to consider a June $28.50/$29 bull call spread. At last check, this spread was offered at 13 cents, or $13 per pair of contracts. Breakeven lies at $28.63, while a maximum profit of 37 cents, or $37 per pair of contracts, is possible if GE stock closes at or above $29 when June options expire.

NVIDIA, LOWE'S, TIFFANY NEWS TODAY

NVDA stock is higher on reports of a massive Softbank stake

U.S. stocks are posting modest gains ahead of the release of the Fed's meeting minutes this afternoon. Among specific stocks on the move are semiconductor stock NVIDIA Corporation (NASDAQ:NVDA), home improvement retailer Lowe's Companies, Inc. (NYSE:LOW), and luxury retailer Tiffany & Co. (NYSE:TIF). Here's a quick look at what's moving shares of NVDA, LOW, and TIF.

NVDA Stock Explores Record Highs on Softbank Reports

Nvidia stock is up 2.5% to trade at $140.50, and earlier notched a record high of $141.07, amid reports Japan's Softbank sports a $4 billion stake in the chipmaker. This brings NVDA's month-to-date gain to 34.7%, with the company crushing earnings expectations earlier in May. Even with the stock's monster gains, 12 of 26 brokerage firms maintain "hold" or "sell" ratings, leaving the door open for upgrades to lure more buyers to the table. NVDA stock is trading well its average 12-month price target, too, which sits at $125.59.

Earnings Sink LOW Stock

Lowe's stock is getting hammered this morning after the company's disappointing quarterly results, with the shares giving back 4.2% to trade at $78.90. This puts the retail giant on pace for its lowest close since late February, before a notable earnings bull gap, but LOW stock still maintains a 10.9% year-to-date gain. This pullback may be catching options traders by surprise, though. Lowe's has a Schaeffer's put/call open interest ratio (SOIR) of 0.24, which is an annual low. In other words, near-term options traders are the most call-skewed they've been in at least a year.
TIF Stock Drops on Sales Surprise

Tiffany & Co. reported weaker-than-expected quarterly sales, and a surprise dip in comparable store sales, sending TIF shares down 8.9% to $84.89. The stock seems to have found support just above $84, however, an area that represents its highs from late 2015 and late 2016, and a 50% Fibonacci retracement of its drop from late 2014 to mid-2016. A number of short sellers seemingly missed out on today's bear gap, too, with short interest on Tiffany falling by almost 21% over the last two reporting periods.
Article by MagnusYard.

AEGEAN MARINE, CIENA, IBM DOWNGRADED

Earnings and a downgrade have ANW shares trading at levels not seen since last summer

Analysts are weighing in on fuel logistics firm Aegean Marine Petroleum Network Inc. (NYSE:ANW), tech stock Ciena Corporation (NYSE:CIEN), and blue chip IBM Corp. (NYSE:IBM). Here's a quick roundup of today's bearish brokerage notes on shares of ANW, CIEN, and IBM.

ANW Stock Slaughtered After Earnings

Aegean stock has gapped 37% lower to $6.60 -- its lowest point since last August. Weighing on ANW shares is the company's first-quarter earnings miss, as well as a downgrade to "hold" from "buy" from Stifel. The brokerage firm also slashed its price target in half to $9. The stock had recently found support atop its 200-day moving average, but is now trading well below this trendline and is in the red year-to-date.

Short sellers are likely reaping the rewards of this post-earnings bear gap. Though ANW stock is short-sale restricted today, a record 6.3 million shares are currently sold short -- 24% of the security's available float.

CIEN Stock Dips After Deutsche Bank Downgrade

Analysts at Deutsche Bank cut their rating on Ciena stock to "hold" from "buy," and sliced their price target to $23 from $28. The brokerage firm said it expects CIEN to remain range-bound in the near term amid lower earnings-per-share expectations. Ciena will unveil its fiscal second-quarter results before the market opens on Thursday, June 1.

Against this backdrop, CIEN stock is trading down 3.4% at $23.53 -- a region that served as a magnet for the shares in March. Should Ciena shares continue to struggle, there's plenty of room for analysts to continue to downwardly revise their ratings. Of the 15 covering the stock, 13 maintain a "buy" or better rating, with not a single "sell" on the books.

Stifel Slashes Price Target on IBM Stock

IBM stock saw its price target cut to $182 from $192 at Stifel this morning. In response, the shares are trading down 0.1% at $151.87, though the negative price action is nothing new for Big Blue. In fact, since reporting earnings in late April, IBM shares have shed nearly 11%, a move exacerbated in early May on Warren Buffett-related woes.

IBM options traders have kept the faith, though. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 1.65 ranks in the 77th annual percentile, meaning calls have been bought to open over puts at a faster-than-usual clip.
Article by MagnusYard.

TESLA, U.S. STEEL, TILLY'S UPGRADED

Why one analyst thinks TSLA stock could be headed to $500

Analysts are weighing in on electric car maker Tesla Inc (NASDAQ:TSLA), steel producer United States Steel Corporation (NYSE:X), and retail stock Tilly's Inc (NYSE:TLYS). Here's a quick roundup of today's bullish brokerage notes on shares of TSLA, X, and TLYS.

TSLA Stock Remains Top Pick at Baird

Baird said Tesla stock is still its "Top Pick" for the second half, and reiterated its "outperform" rating and $368 price target -- a 21% premium to last night's close at $303.86, and well above the security's May 2 record peak of $327.66. What's more, the brokerage firm said it believes "a successful Model 3 launch will be an inflection point for the stock," and could theoretically have TSLA fetching $500 per share.

In response, TSLA stock is up 0.9% in electronic trading, on track to add to its already impressive 42.2% year-to-date advance. There's ample cash on the sidelines to help fuel Tesla's fire, too. Short interest accounts for a whopping 26.4% of the equity's available float, or 6.8 times TSLA's average daily pace of trading.

Credit Suisse Upgrades X Stock After Trump Budget

Just one day after seeing its price target cut at BofA-Merrill Lynch, U.S. Steel stock was upgraded to "outperform" from "neutral" at Credit Suisse. The brokerage firm also raised its rating on the steel sector to "overweight" from "market weight" ahead of today's industry review by the U.S. Commerce Department.

It's been a rough road for X stock, which is down 38.3% year-to-date. However, the stock closed back above the round $20 mark yesterday -- settling at $20.38 -- after President Donald Trump's 2018 budget proposal included plans for infrastructure spending. X options traders bet on even more gains through Friday's close, too, and bought to open weekly 5/26 21.50-strike calls. This morning, U.S. Steel shares are trading up 2% ahead of the bell.

TLYS Stock Set for Bull Gap After Earnings, Upgrade

Baird upgraded TLYS stock to "buy," after the retailer reported a first-quarter loss of 1 cent per share on $120.9 million in revenue. Analysts were expecting Tilly's to record a per-share loss of 10 cents on sales of $114.4 million. Against this backdrop, Tilly's stock is set to jump 20% out of the gate, after closing last night at $8.58.

Heading into today's trading, TLYS stock was staring at a 31.3% year-to-date deficit, and a number of short sellers have been exiting their winning positions. Short interest on the equity plunged 35.6% in the most recent reporting period, and now accounts for less than 5% of Tilly's available float.

DOW JONES INDUSTRIAL AVERAGE FUTURES RISE AHEAD OF FED MINUTES

Stocks will look to extend their winning streak amid a big day for economic data

Dow Jones Industrial Average (DJIA) futures are trading slightly above fair value this morning, ahead of a busy day on Wall Street. Traders are awaiting this afternoon's release of the Fed's May meeting minutes, as they try to weigh the chances of a June rate hike. Existing home sales data is also out today, and the weekly update on domestic crude inventories could keep oil prices in focus, as well. For corporate earnings, retail stocks Tiffany and Lowe's are both sharply lower ahead of the open after delivering disappointing quarterly results. As for now, however, the Dow, S&P 500 Index (SPX), and Nasdaq Composite (COMP) are on pace to extend their daily win streaks to five.

Continue reading for more on today's market, including:

Why next Friday could be a brutal day for stocks.
The restaurant stock that could be forming a triple-top pattern.
How options volume exploded amid the Alexion Pharmaceuticals sell-off.
Plus, Intuit jumps after earnings; the steel stock bouncing back; and the FDA news lifting one drug stock.

5 Things You Need to Know Today
 
The Chicago Board Options Exchange (CBOE) saw 813,357 call contracts traded on Tuesday, compared to 489,108 put contracts. The resultant single-session equity put/call ratio moved up to 0.60, while the 21-day moving average stayed at 0.63.
Tax specialist Intuit Inc. (NASDAQ:INTU) is making a notable post-earnings move ahead of the open, with the shares up over 9% after the company topped analysts' earnings estimates and raised its full-year forecast. INTU stock just hit a record high of $130.10 yesterday, before closing at $129.15 -- up 23% year-over-year.
After receiving bearish analyst attention on Tuesday, United States Steel Corporation (NYSE:X) is getting a pre-market lift this morning, thanks to an upgrade to "overweight" from "market weight" at Credit Suisse. X shares hit a 2017 low of $18.55 last week, but recovered to finish Tuesday above the round $20 level.
Insys Therapeutics Inc (NASDAQ:INSY) is also eyeing a strong open, thanks to news Syndros -- its anorexia treatment for AIDS patients -- will launch in August 2017, after receiving its final product label from the Food and Drug Administration (FDA). INSY stock has been churning out higher lows since mid-March, and at $13.18, already boasts a year-to-date gain of 43.3%. The shares are up 5% in electronic trading.
Advance Auto Parts (AAP), Chico's (CHS), Guess (GES), JA Solar (JASO), and NetApp (NTAP) are also on the earnings slate today.

Overseas Trading

Asian markets closed higher today, rising in step with oil prices. In China, stocks spent much of the session trading lower, after Moody's downgraded the country's credit rating for the first time since 1989, citing concerns over a "material rise" in debt. Nevertheless, the Shanghai Composite swung higher to eke out a 0.06% gain. Elsewhere in the region, Japan's Nikkei surged 0.7% on the back of a weaker yen, South Korea's Kospi added 0.2%, and Hong Kong's Hang Seng tacked on 0.1%.

European stocks are mostly lower at midday, pressured by a drop in mining and auto shares. Traders are also digesting a speech from European Central Bank (ECB) President Mario Draghi, and looking ahead to the release of the FOMC meeting minutes. At last check, the German DAX is down 0.2% and the French CAC 40 is 0.04% lower. London's FTSE 100, meanwhile, has tacked on 0.3%, boosted by a positive earnings reaction for retailer Marks & Spencer.

Go Long United States Steel Corporation (X) Stock and Buy American

X stock is a Trump play if there ever was one. Go long infrastructure spending with U.S. Steel.

United States Steel Corporation (NYSE:X) has had a rough 2017. While it was much-loved as a “Trump play,” X stock has fallen by more than 50% since February. But while I’m not one for catching falling knives, I need a speculative play in my portfolio at the moment, so I’m going to attempt to catch this one.

Fundamentally, U.S. Steel has challenges, especially on the profitability front. However, the stock does look like a relative bargain from a price-to-book perspective.

X stock, as mentioned, is a Trump play, so it will benefit from the fiscal spending that the president promised. It’s also a direct beneficiary of the “buy American” message and using US-based resources.
Technically, U.S. Steel has shed a lot of froth, so this falling knife has a bigger proverbial handle to facilitate my task. But I still see risks. Whenever a company has losses, I worry about the dividend regardless of how small it is, because losing it causes selling. X is also near a long-term pivot point which needs to hold, else we could retest $14 levels.

To deal with those risks, I structured today’s set up to benefit even if the X bounce fizzles. I don’t need a rally to profit, so I’ll merely reach to catch the knife without actually doing it.

My thesis is simple. U.S. Steel shares have seen their lows for the year. I will sell downside risk but leave room for error. The trick is to find proven support levels where I expect buyers would step in to buy the stock on the next dip.

How to Trade X Stock
The bet: Sell the Oct $15 put for 65 cents per contract. Here, I have an 80% theoretical chance of success. But if price falls below $14.35, I have to own the shares and I start accruing losses.

Selling naked puts is risky and not suited for all investors. To taper the risk, I would use bull put spreads instead.
The alternate: Sell the $15/$14 credit put spread where the maximum risk is limited, yet I still have a chance at yielding 23%. Compare this with risking $21 to buy X stock with no room for error, which would then require a 20%-plus rally just to match the performance of this spread.

FedEx Corporation (FDX) Stock Is a Breakout Candidate

FDX shares have been trading sideways, but that should resolve in a pop over the coming weeks

Shares of FedEx Corporation (NYSE:FDX), though higher by about 3.7% year-to-date, have largely trotted sideways in a choppy but well-defined range. As the broader market remains defiant but also lacks any meaningful upside momentum, one strategy is to look to important blue chips — like FDX stock — for potential breakout plays.

Let’s start today’s analysis by gaining some perspective on transportation stocks a group through the chart of the iShares Dow Jones Transport. Avg. (ETF)  (NYSEARCA:IYT).

Why look at this ETF to gain perspective on shares of FedEx, you ask? Stocks as an asset class are highly correlated, particularly if we look to individual stock sectors and groups. Thus, if we find something bullish or bearish on the sector or group front, then applying this type of “top-down” analysis will help us boost our chances of getting the single stock’s direction correct.

Anyway, FDX stock has a 13% weight in the IYT, so it’s strongly responsible for the lackluster performance of the fund since it topped out this past February.

At the bottom of the chart, we see the relative performance of the IYT ETF versus the broader large-cap stock market, which clearly shows underperformance. Yet this underperformance recently pulled the IYT back to a key area of confluence support.
This area around the $158-$160 mark is made up of horizontal support, as well as the 200-day simple moving average (red). Over the past few days, the transportation stocks have already begun to bounce. If momentum can sustain, it’s not unthinkable that the IYT could break higher out of its multimonth consolidation range.

That brings us to FedEx.

FDX Stock Charts
On the multiyear weekly chart below, we see that FedEx shares last November, following the election, broke past key horizontal resistance around $180-$185, but quickly fell into a sideways consolidation range.

The bulls will point to the fact that this consolidation is taking place above former technical resistance (true). But the bears will note that the sideways range is not bullish until we see a continuation breakout to the upside (also hard to argue against).

Lastly, on the daily chart we see that FedEx’s sideways range in recent months did allow its 200-day simple moving average (red) to play some catch-up, which also makes it a next key area of support.

Traders looking to play a breakout in FDX stock may have to exercise further patience.

However, the broader stock market continues to slowly grind higher, and the technical support backdrop for transportation stocks as a group is strong. Thus, I believe an eventual breakout above the $196 level on a daily and preferably on a weekly closing basis could get a next leg higher toward $210 underway.

If nothing else, trading FedEx like this strikes me a more sane strategy for the near-term than chasing overextended large cap tech stocks higher at all-time highs.

WHY NEXT FRIDAY COULD BE A BRUTAL DAY FOR STOCKS

In recent years, SPX weekly returns have been unimpressive after Memorial Day

Next Monday is Memorial Day, a time to remember those who have given their lives while serving in the armed forces. For many, it means parades, cookouts over the weekend, and the unofficial start of summer. For the stock market, it means a shortened four-day trading week. Below, we will discuss some stock market data based on the holiday week.

SPX Returns During Memorial Day Week

Memorial Day officially became the last Monday in May starting in 1971. Since then, as the table below indicates, the week of Memorial Day has been a pretty good one for the S&P 500 Index (SPX). The average return of 0.53% beats the typical weekly return of 0.16%, with a higher percentage of positive returns, as well -- about 61% vs. 56%. 

However, looking at more recent data since 2010, the holiday week has been quite bad for stocks. Over the past seven years, the S&P 500 has averaged a loss of over 1% during Memorial Day week, with only two of those returns positive.

Breaking Down SPX Returns by Days of the Week

Below is a breakdown of Memorial Day week by each day, starting with the Friday before the long weekend. The Friday before the holiday, the SPX has performed only slightly better than average. The main reason for any outperformance during the holiday week has been due to the big gains that occur toward the beginning of the week.

Tuesday has been positive less than half the time -- but when it has, it's typically a pretty big gain. Therefore, despite the low percentage of positive returns, the average return for the first day of Memorial Day week is 0.23%, which is far and away better than the typical Tuesday. 

Wednesday through Friday are all positive roughly 60% of the time, which is better than the typical returns. Thursday stands out, however, as very bullish, with an average return of 0.20

Below is the daily breakdown since 2010, when the holiday week returns have been generally bearish -- and it's all gone wrong for the SPX at the end of the week. The Friday of Memorial Day week has been positive just once in the last seven years, averaging a loss of 1.29

Why the SPX's Year-to-Date Performance Bodes Well for Stocks

The table below could be good news for the rest of the year. This study looks at SPX returns for the rest of the year after Memorial Day week, depending on whether the market was positive or negative year-to-date before then. 

If the index was higher year-to-date, then the rest of the year was positive roughly 73% of the time, averaging a return of 5.75%. If stocks were down on the year, then the index averaged a measly 2.75% loss, with just 38.5% of the returns positive.

The SPX is currently up nearly 7% year-to-date, so hopefully this pattern holds true for 2017

DOW JONES INDUSTRIAL AVERAGE EXTENDS WIN STREAK AS OIL STAYS HOT

Crude futures rose for a fifth straight day

It was another ho-hum day on Wall Street, though the Dow Jones Industrial Average (DJIA) managed a fourth straight win. Stocks again took their cues from oil prices, which continued to rise ahead of Thursday's OPEC meeting. Meanwhile, traders digested President Donald Trump's budget proposals for the next fiscal year, and kept an eye on emerging details surrounding last night's deadly terrorist attack in Manchester. Like the Dow, the S&P 500 Index (SPX) notched a fourth straight win -- a feat also matched by the Nasdaq Composite (COMP).

Continue reading for more on today's market, including:

One USO speculator's risky trade ahead of this week's OPEC meeting.
The Apple agreement that had Nokia stock rallying.
Goldman: This energy stock is an "attractive M&A target."
Plus, the tech stock that left short sellers reeling; the bullish case for a big-name hotelier; and 3 stocks making massive moves.
The Dow Jones Industrial Average (DJIA - 20,937.91) picked up 43.08 points, or 0.2%, with 19 of 30 Dow components closing higher. The biggest winner was Goldman Sachs, which added 1.7%. Home Depot stock had the worst day, settling 0.7% lower.

The S&P 500 Index (SPX - 2,398.42) added 4.4 points, or 0.2%. The Nasdaq Composite (COMP - 6,138.71) closed up 5.1 points, or 0.08%.

The CBOE Volatility Index (VIX - 10.72) lost 0.2 point, or 1.9%, to collect its fourth straight daily drop.

5 Items on Our Radar Today:
British police suspect that 22-year-old Salman Abedi was the suicide bomber behind last night's deadly attacks in Manchester. Abedi was reportedly born in Manchester, though few additional details were released about him. (Reuters)
Former CIA Director John Brennan today told the House intelligence committee that Russia actively contacted members of President Trump's campaign during the 2016 election. Brennan stopped short of describing the activity as "collusion." (CNN)
The IT stock that has short sellers running scared.
Why Marriott stock could keep rising on the charts.
Behind today's big moves in AAP, CERS, and ETRM.

Commodities

Oil prices gained for a fifth straight day amid hopes for extended output cuts. July-dated crude futures rose 34 cents, or 0.7%, to $51.47 per barrel.

Gold futures struggled today, as the dollar stabilized. June-dated gold ended down $5.90, or 0.5%, at $1,255.50 per ounce.

Article by MagnusYard.

OPTIONS VOLUME SOARS AS ALEXION PHARMACEUTICALS SINKS

The drugmaker announced a pair of top executives will be leaving

Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) is trading down 9% at $104.97 -- fresh off a three-year low at $102.47 -- amid a busy session for the stock. Roughly 1.5 million ALXN shares have changed hands, the most in two years, after the drugmaker said its chief financial officer and the head of research and development are both leaving. A downgrade to "neutral" from "overweight" at J.P. Morgan Securities is adding more pressure, with the brokerage saying the executive shake-up "will not help waning confidence in ALXN shares." With the stock short-sale restricted, ALXN options traders are busy.

At last check, 21,379 calls and 19,138 puts have traded on ALXN, more than 20 times what's typically seen at this point in the day. Total options volume is on track to settle in the 99th annual percentile, but remains below the 52-week peak of 61,806 Alexion options traded in a single session, set on Jan. 5. Most active are the November 100 and 110 puts and 120 call, which appear to be involved in a three-way spread.

Shorter-term options traders look to be taking a more clear-cut bearish approach, purchasing new positions at ALXN's weekly 5/26 102-strike put. If this is indeed the case, the goal is for Alexion shares to be sitting south of $102 -- territory not charted since October 2013 -- by week's end, when the options expire.

his would echo the broader trend seen in ALXN's options pits, too. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 3.40 ranks 2 percentage points from a 52-week peak. In other words, options traders have bought to open puts relative to calls at a near-annual-high clip. 

The skepticism is seen outside of the options pits, as well, with short interest up 29% since mid-March. It seems this selling pressure has weighed on ALXN's stock price, too, with the shares down almost 23% from their March 6 high at $135.86. However, not a single one of the 18 analysts covering Alexion Pharmaceuticals maintain a "sell" rating. The stock could be due for bigger headwinds, should more bearish brokerage notes come down the pike.

DOW JONES INDUSTRIAL AVERAGE HOLDS GAINS AFTER TRUMP BUDGET

The DJIA is on track for a fourth straight win, though today's upside is modest

The Dow Jones Industrial Average (DJIA) has spent the first half of the trading session in positive territory, and is on track to extend its daily winning streak to four. Nevertheless, gains have been kept in check as traders consider last night's deadly terrorist attack at an Ariana Grande concert in Manchester and a mixed bag of economic data here at home, including a bigger-than-expected drop in new home sales. Traders are also mulling over President Donald Trump's fiscal 2018 budget proposal, which includes $3.6 trillion in spending cuts over the next 10 years, while looking ahead to an afternoon speech from Minneapolis Fed President Neel Kashkari.

Continue reading for more on today's market -- and don't miss:

SPY put options price in another shocker, says Bernie Schaeffer.
How options traders doubled their money on Alibaba stock.
Plus, Momo options volume explodes; AutoZone stock slumps to new low; and Seadrill's big bounce.

Among the stocks with unusual options activity is Momo Inc (ADR) (NASDAQ:MOMO), with nearly 41,000 contracts traded -- representing eight times the expected intraday pace, with volume running in the 100th annual percentile. MOMO stock is trading down 2% at $41.96 post-earnings, retreating from yesterday's record high of $45.95, and most of the option activity appears to be the result of traders liquidating weekly 5/26 call positions ahead of Friday's expiration.

AutoZone, Inc. (NYSE:AZO) is one of the biggest decliners on the New York Stock Exchange (NYSE), after the auto parts retailer's disappointing earnings report was met with a downgrade at Raymond James. AZO stock is down 8.9% at $601.09 -- fresh off a two-year low of $597.45 -- and on track for its worst day in eight years.

Rig operator Seadrill Ltd (NYSE:SDRL) is one of the leading percentage gainers on the NYSE, up 9.4% to trade at $0.57. Today's pop may be more of a dead-cat bounce for SDRL stock, though, considering it's down 83% year-to-date, and hit a record low of $0.51 yesterday. Seadrill is expected to report first-quarter earnings tomorrow.

MOMO, NOKIA, AUTOZONE NEWS TODAY

MOMO stock has been on fire this year, but is trading lower today

The Dow is on pace for a fourth straight day of gains. Among specific stocks on the move are China-based social media concern Momo Inc (ADR) (NASDAQ:MOMO), smartphone specialist Nokia Oyj (ADR) (NYSE:NOK), and car parts retailer AutoZone, Inc. (NYSE:AZO). Here's a quick look at what's moving shares of MOMO, NOK, and AZO.

MOMO Stock Swings Lower After Earnings

Momo stock is down 7.1% at $39.81, despite a blowout first-quarter earnings report. Nevertheless, the shares are still up 116% year-to-date and hit a record high of $45.95 yesterday. Short-term options traders have shown an unusual preference for calls over puts, per MOMO's Schaeffer's put/call open interest ratio (SOIR) of 0.43, which ranks in the low 16th annual percentile.

Apple Agreement Sends NOK Stock Higher

Nokia stock is up 6.3% this morning at $6.60, earlier tagging an annual high of $6.65, thanks to news the company has settled its patent dispute with Apple, with the companies signing a new collaboration agreement. NOK shares have been rallying hard since bouncing from their 200-day moving average late last month, but analysts remain bearish. Specifically, 70% of covering brokerage firms rate Nokia a "hold."

AZO Stock Crushed by Disappointing Earnings

AutoZone's fiscal third-quarter earnings missed analysts' expectations, with the company citing delayed tax refunds for the disappointing numbers, and the shares have so far shed 7.7% to trade at $608.83. In fact, AZO stock earlier hit a two-year low of $597.45, and Raymond James has weighed in with a downgrade to "market perform" from "strong buy." More bearish notes from analysts are certainly a possibility, since 10 of 17 brokerage firms recommend buying AutoZone stock, with zero "sell" ratings on the books.

U.S. STEEL, XILINX, HELMERICH & PAYNE DOWNGRADED

Analysts are weighing in on steel maker United States Steel Corporation (NYSE:X), semiconductor stock Xilinx, Inc. (NASDAQ:XLNX), and energy name Helmerich & Payne, Inc. (NYSE:HP). Here's a quick roundup of today's bearish brokerage notes on shares of X, XLNX, and HP.

X Stock Price Target Cut at BofA-Merrill Lynch

Since topping out at a two-year peak of $41.83 in late February, X stock has shed more than half its value to trade at $19.32. In response, BofA-Merrill Lynch cut its price target on U.S. Steel to $23 from $26. While the majority of analysts have taken the skeptical route with "hold" or worse ratings, X options traders have been buying to open calls relative to puts at a near-annual-high clip of late. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), U.S. Steel's 10-day call/put volume ratio of 2.31 ranks 6 percentage points from a 52-week peak.

Wells Fargo Downgrades XLNX Stock After Analyst Day

XLNX stock hit a 16-year high of $67.75 ahead of the company's annual analyst day. Today, the shares are trading down 5.7% at $63.62, after Wells Fargo downgraded the equity to "market perform" from "outperform," citing a "lackluster growth dynamic in [the] PLD market." Should Xilinx stock shake off today's dip and resume its longer-term uptrend, there's plenty of skepticism to be unwound. More than three-quarters of covering analysts maintain a "hold" or worse rating, and it would take short sellers nearly four sessions to cover their bearish bets. This could create tailwinds for the shares in the near term.

HP Stock Trades Down On Negative Goldman Sachs Outlook

Goldman Sachs downgraded HP stock to "sell" from "neutral" and slashed its price target to $45 from $63 -- territory not charted since early 2016. The shares have tumbled 5.4% to trade at $56.64, bringing its year-to-date deficit to 25%. Meanwhile, there's plenty of pessimism directed toward the energy stock. Short interest accounts for more than 17% of Helmerich & Payne stock's available float, while 74% of analysts maintain a "hold" or "strong sell" rating.

CARVANA, WINGSTOP, ATWOOD OCEANICS UPGRADED

Analysts are weighing in on used car website Carvana Co (NYSE:CVNA), restaurant chain Wingstop Inc (NASDAQ:WING), and energy stock Atwood Oceanics, Inc. (NYSE:ATW). Here's a quick roundup of today's bullish brokerage notes on shares of CVNA, BWLD, and ATW.

Analysts Issue "Buy" Ratings for CVNA Stock

On Monday, Carvana shares received their first "buy" rating since going public on April 28, courtesy of Craig-Hallum. More analysts have followed suit today, with Baird, BofA-Merrill Lynch, BMO, Citigroup, and Wells Fargo also initiating coverage with the equivalent of a "buy" rating. While CVNA stock is trading up 4.4% at $11.56 this morning, it remains below its record peak of $13.94, hit on its first day of trading.

Goldman Sachs Adds WING Stock to "Conviction Buy" List

WING stock has recently found a foothold atop its 30-day moving average, home to its year-to-date breakeven mark. Following a successful test of this trendline yesterday, Wingstop shares are trading up 3% at $30.55, after Goldman Sachs added the equity to its "Conviction Buy" list, calling it "one of the few unchallenged unit growth stories." Almost all of the brokerages covering WING stock tend to agree, with nine out of 11 issuing a "buy" or better rating, and not a single "sell" in the books.

ATW Stock Upgraded On M&A Potential

Goldman Sachs raised its rating on ATW stock to "neutral" from "sell" and its price target to $8.25 from $7.50, saying the company has better visibility and is an "attractive M&A target." While Atwood Oceanics shares have added 3% to trade at $8.99, they still remain more than 30% lower year-to-date. Short sellers have helped drive this bearish price action, too. Short interest accounts for nearly 29% of ATW's available float, or 8.3 times the stock's average pace of trading.

SPY PUT OPTIONS PRICE IN ANOTHER SHOCKER

Last Wednesday's stock sell-off triggered a Brexit-style spike in put option skews on the broad-based equity ETF

Options volume exploded last Wednesday as stocks sold off in response to the ever-spiraling series of crises from Capitol Hill, with the Options Clearing Corporation (OCC) recording the highest single-day volume since Nov. 10 -- and the most active day for put options, in particular, since June 24. Not surprisingly, the broad-based SPDR S&P 500 ETF Trust (SPY) attracted quite a bit of attention; Trade-Alert data shows SPY generating more than 80% of the day's ETF option volume. That includes some 3.59 million SPY puts, which marked the fund's highest put volume day since the post-election peak of 3.91 million back on Nov. 9.

Simultaneous with this spike in SPY put volume was a jump in the exchange-traded fund's 30-day at-the-money implied volatility (IV) skew, which reflects the difference in IV levels between put options and their call counterparts. In percentage-point terms, SPY's IV skew popped to 6.00 on Wednesday, and kept climbing to 6.10 by Thursday -- this metric's highest point since the Nov. 8 pre-election peak of 7.63.

Notably, in the midst of this SPY put volume frenzy, 30-day IV on the fund rose only as high as 12.29% as of Wednesday, in territory explored as recently as mid-April. Likewise, the CBOE Volatility Index (VIX) briefly set a marginal new year-to-date high on Thursday, but eventually cooled to end the session lower (and settled the week not too far above its calendar-year midpoint). So while short-term puts on SPY are now considerably more expensive than their corresponding call strikes, it would seem that short-term volatility expectations are still well within what's recently been the norm.

From a purely practical standpoint, this bottom-lines to a less-than-ideal time for investors to hedge long stock positions via the purchase of short-term, at-the-money SPY put options, which have rarely carried a steeper IV premium in the last year relative to their call counterparts -- and as such, it's an effective reminder that the best opportunity to acquire portfolio hedges is before you need them.

And from a sentiment analysis standpoint, it's interesting that SPY put volume last week attained heights previously reached on just two other occasions in the past year -- both of which coincided with election results (first in the U.K., and then here in the U.S.) that were generally considered to be the unlikeliest possible outcome. And to add another layer to this analysis, the number of bulls in the latest American Association of Individual Investors (AAII) survey tumbled, as of the week ended May 17, to the lowest level since the U.S. election, as the so-called "despondency ratio" of neutral and bearish respondents hit its loftiest point since Nov. 2.

With the appointment of a special counsel creating a considerable overhang of uncertainty in Washington, D.C., and cable news pundits floating "the 'i-word'" in their nightly broadcasts, it may be of some comfort to investors to consider the degree to which a "Brexit"-level -- or "Trump victory"-level -- shocker appears to have been already priced into the SPY options market.

DOW JONES INDUSTRIAL AVERAGE FUTURES SIGNAL FOURTH STRAIGHT DAY OF GAINS

Dow Jones Industrial Average (DJIA) futures are trading above fair value this morning, as investors consider the latest corporate earnings and speeches from regional Fed presidents. Specifically, Minneapolis Fed President Neel Kashkari, Philadelphia Fed President Patrick Harker, and Chicago Fed President Charles Evans will all speak throughout the day. Oil prices should also remain in focus, as Thursday's meeting of top oil producers approaches. At last check, July-dated crude futures were down 0.1% at $51.10 per barrel.

Stock traders are also keeping tabs on last night's deadly explosions in Manchester, which prompted U.K. officials to raise the terrorist threat level to "severe." Regardless, the Dow and its index peers look set to extend their win streaks to four.

Continue reading for more on today's market, including:

Why Trump headlines can't take all the blame for last week's VIX spike.
How Raytheon options traders reacted to a multi-billion arms deal.
Goldman weighed in on a preferred cloud stock pick.
Plus, Toll Brothers earnings top estimates; Momo stock is on pace for new highs; and analysts clash over Xilinx.

5 Things You Need to Know Today
  

1. The Chicago Board Options Exchange (CBOE) saw 923,272 call contracts traded on Monday, compared to 496,667 put contracts. The resultant single-session equity put/call ratio moved down to 0.54, while the 21-day moving average edged down to 0.63.
2. Toll Brothers Inc (NYSE:TOL) is up more than 3% in pre-market trading, thanks to a strong fiscal second-quarter earnings report. TOL stock was already trading at annual highs, and this move would mark its sixth straight quarter of post-earnings gains. 
3. Chinese social media stock Momo Inc (ADR) (NASDAQ:MOMO) has been surging up the charts this year, and that rally is set to continue, with a better-than-expected first-quarter earnings report set to put the U.S.-listed shares in record-high territory. MOMO stock was already up 133% year-to-date, and yesterday hit an all-time high of $45.95. 
4. Programmable chip stock Xilinx, Inc. (NASDAQ:XLNX) has been another hot property, touching a 16-year high of $67.75 yesterday. However, XLNX shares are down 3% in electronic trading, due to a downgrade to "market perform" from "outperform" at Wells Fargo. Elsewhere, SunTrust Robinson and BMO weighed in with price-target increases to $68 and $71, respectively. XLNX is set to open near $65, which marked its post-bull gap highs from late April through mid-May. 
5. Cracker Barrel (CBRL), Diana Shipping (DSX), and Intuit (INTU) are some other names on today's earnings calendar. New home sales data will be released, too. 

Overseas Trading

It was a mixed finish in Asia, as traders digested news of a deadly bombing in northern England and oil prices retreated. In Japan, the Nikkei slid 0.3% as the yen rose on its safe-haven status. China's Shanghai Composite also closed lower, shedding 0.5%. On the flip side, South Korea's Kospi tacked on 0.3%, while Hong Kong's Hang Seng edged up 0.05%.

European stocks are trading higher at midday, brushing off the terrorist attack at an Ariana Grande concert in Manchester, which the Islamic State has since claimed responsibility for. While London's FTSE 100 is up 0.13%, the German DAX has added 0.6% after Ifo's business confidence index hit a record high this month, and factory activity grew at its fastest pace since April 2011. The French CAC 40 is also in positive territory after upbeat economic data, trading 0.8% higher after IHS Markit's preliminary purchasing managers index (PMI) notched a six-year peak.

Article by MagnusYard.