JaguarWebinar, October 24
Webinar Summary – October 24th
00:00: Market action & expectations: REPO market defined, exemplified and discussed as the FED doubled its target from $65B to $130B. BofA note from this morning discusses possible liquidity risk ahead. Many signs are discussed, overall volumes looked at, bid/ask spreads, short interest and volatility are also part of the view. Passive versus Active investing activity also viewed and discussed.
27:40: Gold (GLD) technical improvement today, price has flatlined for nearly 5 weeks and appears to be moving higher. Treasury ETF (TLT) also set up similarly ahead of FOMC decision date on October 30th.
31:45: Activision Blizzard (ATVI) attempting to break out once more, $56 level has presented opposition to upside since September. Earnings are due on November 7th ahead of which BofA has released a preview. The analyst does not expect a ‘good quarter’ as it faces very tough YoY comps. On the upside, ‘Call of Duty: Mobile’ downloads have now reached 130M which could mean around $2M per day in monetization opportunity which would theoretically add to 4Q revenue estimates, FY2020 EPS could be improved by $0.15. To date, consensus does not account any of this game’s revenue into its calculations and may be off by considerable amount. Closer catalysts include BlizzCon conference from November 1st-3rd. Seeing some call buying today which supports bullish case along with all the other mentioned reasons.
41:40: Fortinet (FTNT) channel checks from Oppenheimer discussed, based on which the analyst expects 3Q2019 results that would “surpass the Street’s estimates”. Recent product launches, ongoing refresh cycle and healthy security spending are cited to be contributing factors as well. FTNT also could benefit from Microsoft’s (MSFT) commentary on increased hybrid cybersecurity activity. Technical setup supports a new leg higher that could re-test $88 range .
50:20: Taiwan Semiconductor (TSM) continues to remains strong, today an article on AnanandTech discusses 5nm wafer ramp that is projected to ramp above 7nm production, slated to begin in 2Q2020. The author’s views are based on TSM’s CEO commentary on CapEx spend – this also likely benefits ASML Holdings (ASML). Other companies that would benefit from production ramps are MKSI and AMAT.
59:50: Micron (MU) Bullish discussion. The company has already reported earnings after which shares pulled back sharply. Technically, it has built a base that has turned up recently, especially today which was helped by peer LAM Research (LRCX) earnings and forecast of foundry business growth that was off the charts. Management also noted ‘early signs of NAND recovery’ that would benefit all chip manufacturers. Even MU management had commented similarly in their report, saying DRAM/NAND average selling price improvement that started in mid02019 with expectations of increases ahead, as early as February 2020. Aside from political issues (US-China trade war), the risk is small. FY2020 consensus may end up to be behind as forecasts were cut in early 2019, without recent revisions. Longer view, 6-9 month Target $65, Stop Loss $41.50. Trade idea is to buy December 47 calls for $2.82 or less.
74:45: Attendee Q&A: BSX (has a coupe of catalysts ahead, nice rise on very high volume that points to more upside, remaining long), TSM (keep holding January 50 calls), TSLA (cutting losses, upside on future commentary may change the stock’s sentiment), DHR (small miss on guidance, not much in the way of catalysts at this time though but a good point to go long), KEYS (can go long with January 100 calls either here or a bit lower near $100), LGF.b (still holding common, a spinoff of STARZ could unlock value, or it could get taken private otherwise likely remains depressed), RTN (benefiting from earnings and also recent mention by UTX that, once merged, they would divest some industrial businesses that are under-performing, roll call spread out to further months), MSFT (roll out to December 145 calls ), AMZN (no play on earnings tonight, competition is getting stronger especially from mega-cap names like MSFT & WMT), GLD (roll out November calls to at least December), VAR (close longs here), CIEN (close out calls, outlook needs to improve before looking at it again).
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