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.