Morning Note

Trading Observations

• Quiet start to the week with Retail sales tomorrow, Jobs Wed, and CPI Fri, and a number of tech earnings on deck

• With the rally Fri, reclaimed 50-day (6885) but should we pullback, really need to hold 6860 support

• GS apparently suggesting $33B of equity selling due to hit this week. So may be tested? But plenty of short exposure now to provide support? https://tinyurl.com/26x4p8yu [tinyurl.com]

• 7000 back as resistance level to watch

• Due for a move?  The S&P 500 has gone 4 weeks in a row with weekly gains between 0.5% and -0.5%. Has NOT hit 5 in a row since 1965

• For the bulls, Earnings continue to rise https://tinyurl.com/ysruznz9 [tinyurl.com] 

• International growth a tailwind https://tinyurl.com/5n6b6yd4 [tinyurl.com]  

• Notable that at same time as Dow 50,000 mark cleared, new highs in both the industrials and transports trigger a DOW THEORY buy signal

• Also, 52wk highs on NYSE highest since 2024, NYSE A/D line closed at new all-time high in addition to new highs in DIA and RSP

• No sign of weakness to suggest a major pullback coming https://tinyurl.com/5fw2jc7u [tinyurl.com] 

• For the bears, correlations breaking down https://tinyurl.com/y8axnhsv [tinyurl.com]

• Energy > Mag7 going forward? https://tinyurl.com/bdfapm76 [tinyurl.com] 

• While it 'feels' like labor weakening, haven't seen layoff talk spike yet https://tinyurl.com/29c2t78u [tinyurl.com]

Futures

DOW -100

S&P -16

Nasdaq -88

Charts/Sentiment

Financials / Consumer / Healthcare

Goldman expects US IPOs to quadruple to record $160B in 2026 – Reuters

HIMS – Down 22% - NVO has had enough and is suing HIMS for trying to sell a weight loss pill. It’s completely illegal to compound these drugs right now, and the patent should hold, but the stock market needed to see the suit to believe it.

LLY – Up 1% on a new drug deal worth ~$2.5B (small for LLY these days).  Chinese biotech Innovent Biologics. 

SOFI – Upgraded to buy at Citizens.

PGY – Down 22% - Another Fin Tech name with a very cheap valuation misses numbers and gets wrecked. There is just no bid for these falling knives.

KD – Down 54% - Think of them as a mini-Accenture. Earnings were kind of bad, but the real headlines are “material weakness in internal controls”, which the market hates.

Crypto Related – The legitimate businesses like HOOD and SOFI are up 2%, and the rest of the lot is down 2-3%. Will MSTR hit 1-1 value with its holdings? Will the White House meeting slow the tide? The Guthrie kidnapping isn’t helping use case.

KR – Kroger up 6% on a new CEO hire from Walmart.

AMC – Filed to sell $150MM in shares. The stock is $1.50. Remember when it was a meme stock?

ZION – Downgraded to neutral at Baird. They upgraded in October on the panic related to fraud losses. Bank panic buying makes them cool on the sector.

AZO – Downgraded to neutral at Baird as they call it a defensive compounder but like other ideas better at this price.

GPN – Upgraded at Baird to Bullish Fresh Pick as checks are coming in positive.

Technology

NET – Baird Preview/Checks - While execution must remain sharp to justify the premium multiple, we remain constructive on NET’s position as a leading edge-AI/agentic platform, as sentiment further normalizes and valuation resets from peak levels

MNDY - Monday.com shares drop 15% premarket after the software company’s revenue forecast was weaker than expected. The report comes at a time when investors are growing more concerned about the impact AI could have on software’s long-term growth rates.

MSFT - is being downgraded to hold from buy at Melius Research LLC, which cites concerns over AI-related disruption.

ORCL - climbs 4.7% premarket, D.A Davidson upgraded the shares to buy from neutral, saying OpenAI is set to exceed investor expectations in term of model performance.

WDAY - Workday co-founder and current Executive Chair Aneel Bhusri is returning as CEO, replacing Carl Eschenbach effective immediately.

Industrials 

RIG - Transocean shares fell 3.7% in premarket trading after it agreed to acquire Valaris in an all-stock transaction valued at approximately $5.8 billio

Crown Holdings (CCK) downgraded to neutral from buy at UBS; $126 PT

Corteva (CTVA) downgraded to neutral from buy at UBS; $80 PT

Timken (TKR) upgraded to overweight from sector weight; $130 PT

Westlake (WLK) downgraded to neutral from outperform at Mizuho; $88 PT

ZTO Express (ZTO) upgraded to outperform from neutral at Macquarie; $26.60 PT

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