21 June Mixed Action Shown On Quadruple Options Expire Day
On 21 June 2024 where there are four different sets of options expiring on the same day, mixed action can be seen from the market on this quadruple options expiration day. This has led to above-average volume.
Though slight negative skew was seen on a market breadth for most trading session, but NYSE and NASDAQ saw advancers had an 11-to-10 lead over decliners at the close.
Friday anticipation of stocks due for pullback has created a lack of conviction. We can see the mixed feelings at the index level were driven by varied action in the mega cap space.
Declines From 0.2% to 4.4% was seen in the session. Broadcom (AVGO) has the largest decline of 4.4%, followed by Nvidia (NVDA) by 3.2%. Meta Platforms (META) outside of the semiconductor stocks also saw a 1.4% drop. Apple (AAPL) and Eli Lilly (LLY) both declined by 1.0% and -0.2% respectively.
3 Mega Caps Gains Cannot Help Information Technology Sector
S&P 500 sector performance was mixed. Though we saw Amazon (AMZN) with a 1.6% gain, Alphabet (GOOG) with 1.4% gain and Microsoft (MSFT) with a modest 0.9% gain.
None of the sectors moved more than 0.7% in either direction except the consumer discretionary sector, which rose 1.02%, and the information technology sector, which fell 0.84%, due to their respective mega cap components.
Treasury Yield Retraced Early Gains After Economic Data
Treasuries have some early gains retraced back after the release of stronger-than-expected preliminary June S&P Global U.S. Manufacturing and Services PMI readings. These overshadowed an existing home sales report for May that was close to expectations.
The 2-yr note yield was unchanged from yesterday, and up five basis points for the week, at 4.743%. The 10-yr note yield settled unchanged today at 4.257%, which is up five basis points this week.
Pickup in Inventory of Homes for Sale But Inventory Still Constrained
On Friday (21 June), June S&P Global US Manufacturing PMI, the preliminary came in at 51.7 higher than previous of 51.3. June S&P Global US Services PMI Preliminary was also higher at 55.1 than previous of 54.8.
May Existing Home Sales was lower at 4.11 mln than previous of 4.14 mln. The key takeaway from the report is that there was a pickup in inventory of homes for sale; however, inventory overall remains constrained, which is leading to ongoing price gains that continue to pose affordability pressures, along with elevated mortgage rates, for prospective buyers.
May Leading Indicators was higher at -0.5% than previous at -0.6%.
Stocks To Watch This Week (24 June 2024)
$Eli Lilly and Co (LLY.US)$ announced that its drug tirzepatide, marketed as Mounjaro and Zepbound, met its primary goals in a phase 3 trial for obstructive sleep apnea (OSA). The drug showed a mean reduction of up to 62.8% in the apnea-hypopnea index, significantly reducing the number of breathing interruptions per hour of sleep compared to a placebo.
Additionally, a secondary endpoint showed disease resolution in 43% and 51.5% of participants in two separate studies. Tirzepatide has Fast Track status from the FDA for treating moderate-to-severe OSA with obesity, and Eli Lilly has submitted an application for this additional indication.
Though Eli Lilly stock price normally rise when updates on their drug came up, from the technical indicators that I used, I am suspecting that next week (24 June), we might see some profit taking amidst consolidation, as MACD is showing a downside crossover might happen soon.
KDJ is also showing sign of downward trading trend.
$Block (SQ.US)$ led Seaport Research Partners' EBIT-to-volumes (ETV) metric for fintech companies, with 67 basis points in Q1 2024. PayPal (PYPL) and Shift4 Payments (FOUR) followed with 0.35% and 0.27%, respectively. BILL Holdings (BILL) had the lowest ETV at 0%, indicating it needs to focus on more profitable volume growth. PayPal and Shift4 Payments consistently generate positive EBIT for each dollar of volume.
Block technical are showing quite positive signs, with MACD crossover for the upside forming, and for the KDJ, we are seeing that the J value is making a move upside, so the price target might be possible at around $62.50 to $62.90.
$Omega Healthcare Investors Inc (OHI.US)$ closed in the green for the seventh consecutive day, gaining nearly 3% over the last six trading sessions. The REIT closed at $33.01, just below its 52-week high of $34.77, and has gained 7.7% in the past year. Analysts have given the stock a "Buy" rating, with strong momentum and valuation prospects.
If we looked at the technical, the MACD looked to be making a bullish crossover, and the KDJ is also showing an upside trend since 20 June 2024, considering the current price around $33, there is a high possibility of an upside.
I would think that the price target we could be looking is around $33 dollars.
Virgin Galactic Holdings (SPCE) saw a 6.83% increase in its stock price on Friday, breaking a six-day losing streak during which it lost 48%. The company recently announced a 1-for-20 reverse stock split to meet the NYSE's minimum per share bid price requirement. Despite the recent gains, the stock has lost 92.13% in value over the past year.
I would think we need to exercise caution when trading this stock as this has happen before and even with the recent gains, there is not much potential upside in near term for this stock.
Summary
This week (24 June) we might see market making a small recovery after the impact from options expiration on last Friday (21 June), the strength of semiconductor sector might be in play again.
One key semi earnings would be Micron on 26 June, this might give us a glimpse of how the overall mega cap and semiconductor stocks might perform if Micron could produce a better-than-expected earnings and also positive outlook.
Appreciate if you could share your thoughts in the comment section whether you think market could make a recovery from last week mixed trading.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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