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- 🐻 Short Squeeze Season
🐻 Short Squeeze Season
Plus, a holiday showdown unfolds—can one streaming giant tackle the game?
Happy Thursday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.
🟨 | US stocks were mixed Thursday. The S&P 500 hit a new intraday high, but ultimately finished flat. The Dow rose 0.4%, while the Nasdaq was also flat.
📈 | One Notable Gainer: Taiwan Semiconductor shares jumped 9.8% after the world's largest advanced chipmaker reported a 54% Q3 profit surge, fueled by strong AI-related demand.
📉 | One Notable Decliner: Elevance Health shares fell 10.6% after Q3 earnings missed expectations at $8.37 per share vs. the $9.66 forecast, despite surpassing revenue estimates with $44.72 billion.
🐻 | Tomorrow's Trade: Short Squeeze Season. Scroll down for more.
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S&P 500 Heatmap. Credit: Finviz
All Stock Heatmap. Credit: Finviz
Global ADR snapshot. Credit: Finviz
MARKET MOVERS
TRV (+9%) Travelers’ stock soars as earnings triple despite record catastrophe losses (MarketWatch)
BX (+6.3%) Blackstone Inc. (BX) Q3 Earnings: Taking a Look at Key Metrics Versus Estimates (Zacks)
SNV (+5.1%) Synovus Financial Shares Jump On Strong Q3 Earnings: What You Need To Know (Benzinga)
CSX (-6.7%) CSX Stock Sinks as Hurricanes Hit Results, Outlook (Investopedia)
NOK (-2.7%) Nokia Q3: Earnings Miss, CEO Cites Telecom Weakness And Anticipates India Demand Rebound (Benzinga)
OVERHEARD ON THE STREET
CNBC: Uber is in early talks to acquire Expedia, with no deal confirmed, marking a potential expansion beyond car travel; CEO Dara Khosrowshahi, a former Expedia CEO, remains on its board.
Reuters: Boeing plans to raise $15 billion through stock and bonds to bolster finances amid ongoing crises, with potential for more funding via securitization, though timing remains uncertain, sources say.
WSJ: PPG will sell its U.S. and Canada architectural-coatings business to American Industrial Partners for $550 million, cutting 1,800 jobs as part of a cost-reduction plan to boost growth.
Reuters: Robinhood launched its desktop platform and added futures and index options trading to its app, aiming to expand its market share and compete with traditional brokerages.
Axios: Chevron, the second-largest U.S. oil company, is moving to Texas to be closer to key industry partners and further establish Houston as the energy capital of the world.
TOMORROW’S TRADE IDEA, TODAY
Playing the Short Squeeze Season
The Criteria
It’s been nearly four years since GameStop’s (GME) 2021 rally. Now Goldman Sachs (GS) believes short squeeze season could be on the horizon again.
According to the firm’s studies, stocks with heightened short interest are typically more likely to rally. Analyst John Marshall said that he has already witnessed this trend playing out over the past week.
So to help investors potentially capitalize, Marshall compiled a list of stocks that Goldman has listed as Buys, feature above-average short interest, and have earnings reports coming up soon. Here are a few of the names he highlighted.
Chewy
Chewy (CHWY) currently has a 10.7% short-interest-to-float ratio — despite gaining around 22% YTD. To be fair, the bearish sentiment is in line with historical precedence. If the pet supplier manages to maintain those gains through year’s end, it will be its first positive year in four years.
But Chewy is not without its bulls either. Its average price target implies 7% upside over the next 12 months, and its average analyst rating is a Buy. According to TD Cowen analyst William Kerr, Chewy is the premiere e-commerce stock in the US pet industry. On top of its retail business, it also operates the largest online pet pharmacy.
Royal Caribbean
Royal Caribbean (RCL) fits Marshall’s criteria as well, with a 4.9% short-interest-to-float ratio.
The cruise line witnessed a spectacular bounce back following the pandemic. Its stock is up over 68% YTD and 133% over the past 12 months. But now, short-selling is the rule, not the exception for Royal Caribbean. In recent days, it has traded above $200, but its average price target is $190.56, and its average rating is Overweight.
However, according to Morgan Stanley (MS) analyst Jamie Rollo, the cruise line has structural advantages over its competitors, making it his favorite stock play in the cruise industry.
If these stocks continue to climb as analysts expect, short sellers may be forced to buy to cover their positions, which could be the perfect storm for the long investor.
Are you bullish or bearish on Chewy (CHWY) over the next 12 months? |
TOGETHER WITH MONEY
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ON OUR RADAR
CNBC: The Biden administration has forgiven $4.5 billion in student loans for over 60,000 borrowers, benefiting more than 1 million under the reformed Public Service Loan Forgiveness program.
BI: Netflix will air NFL games on Christmas as part of a three-year deal, testing its growth in live sports streaming, which can drive subscribers but often struggles with long-term retention.
YF: Disney raises prices for Disney+ and Hulu plans by $1-$2, with Hulu Live TV increasing by $6, following a trend among streaming services to boost profitability.
AP: The Supreme Court allowed a Biden administration rule limiting coal plant pollution to remain in effect, despite legal challenges from Republican-led states, with a dissent from Justice Clarence Thomas.
AP: Hurricanes Helene and Milton are expected to cause over $50 billion in damage, mostly uninsured, with rising rebuilding costs and climate change making future storms stronger and costlier.
FRIDAY’S POLL RESULTS
🟩🟩🟩🟩🟩🟩 🐂 Bullish
🟨🟨🟨⬜️⬜️⬜️ 🐻 Bearish
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