Morning Note

Trading Observations

• Venezuela the big story helping oil stocks, should help keep a lid on oil prices over time

• Manuf ISM today, CES tech conference thru the week (Jensen with keynote today), and Jobs Friday

• A lot of people short AI https://tinyurl.com/3m5wjn9z [tinyurl.com]

• 6840 and 6805 (50-day) support vs. 6920 first resistance

• QQQ getting squeezed in a vice and getting ready to make a larger move, hopefully higher https://tinyurl.com/5n79d5xh [tinyurl.com]

• Four of the last 8 years have featured intra-year drops of 19% or more

• While many (myself included) worry valuation https://tinyurl.com/5d3jummx [tinyurl.com]

• Oscillators neutral, but Nasdaq red 5 straight days (first time since Jan 2024) so starting to push toward oversold

• Small caps already oversold https://tinyurl.com/456uh4rs [tinyurl.com]

• Retail expecting stocks to rise at near record level https://tinyurl.com/mryaawnb [tinyurl.com]

• Cyclicals starting to turn higher https://tinyurl.com/4bksyxpe [tinyurl.com]

• UK alcohol consumption at an all-time low https://tinyurl.com/34vtsfb6 [tinyurl.com]

Futures

DOW +73

S&P +27

Nasdaq +215

Charts/Sentiment

Financials / Consumer / Healthcare

Baird on Restaurants – They think the backdrop will improve a bit in 2026 and like BROS, SBUX, and WING best.

DPZ – Downgraded at TD Cowen on challenges with deliveries.

AZO - Downgraded to neutral at Mizuho on “investment cycle”. Late call.

GHRS – Today’s drug winner +37% as the FDA lifted a hold on trials. ZBIO was the loser, down 50% on a drug efficacy miss.

OSCR (RVER Holding) – Up 4% -Upgraded to equal-weight at Barclays. They upgraded CNC as well.

COST – Upgraded to outperform and Top Pick at Mizuho.

EL – Double upgrades at Ray Jay, up 4%.

Financials – Bitcoin related winning the morning, up 3-5%. COIN caught a GS upgrade. CFG upgraded at Barclays, TFC downgraded.

NVO (RVER Holding) has launched its recently approved pill version of the blockbuster weight loss treatment, Wegovy, for cash-paying U.S. customers at $149 per month, weeks after its FDA approval in December.

GDRX, HIMS – Offering NVO’s pill form at cost.

PYPL – Cut to neutral at Monness Crespi.

Technology

Semi/AI pre mkt movers: CRWV+5%, OKLO+4.5%, AMKR/MU/PLTR+4%, WDC/MRVL+3.5%, ANET/TSM/AMD/NBIS+3%, AAOI/VRT/SMCI/ALAB/CRDO+2%, COHR/AVGO+1.5%

AMD: CEO Lisa Su speaks Mon at 9:30 pm ET - https://www.ces.tech/schedule/amd-keynote/ [ces.tech]

ANET: +3.1% Piper upgrading - "Despite concerns around share shifts to whitebox and Nvidia and the broader capex/AI cycle, Arista appears to be holding share, gaining large enterprise customers, and benefiting from typically lagged capex trends"

AVGO: +1.4% added to US Conviction List at GS; CDNS removed

Bitcoin: +6% to start '26 ... breaking out above negative trend link ... MSTR +4% as of 650am ET

CRWV up 3.9% after what D.A. Davidson & Co described as a “reluctant” upgraded to neutral from underperform.

COIN: +4.5% Goldman upgrading - recent product launches enhance the competitiveness of its core business; "best-in-class play" on the growth of crypto infrastructure

DUOL: +4% crowded short / AI loser bucket ... BofA upgrading - believes its value proposition as an entertainment product is not reflected in growth forecasts. Duolingo's rapid-fire, bite-sized lesson plans provide superior entertainment value than the majority of mobile gaming apps; also thinks Duolingo's 95% annual subscriber rate, and 23% payer/DAU ratio, demonstrate the app's superior value proposition than mobile games

MEMORY: MU+3.8%, SNDK+4.3% .... SAMSUNG, SK HYNIX seek up to 70% server DRAM px hikes (Daily); Samsung co-CEO warns memory chip shortage persist ..... overnight: KIOXIA+9%, Samsung+8%, Hynix+3%, Phison+2% ->Dell, HPE, Lenovo, Supermicro direct cost increase... Also adding to the costs for the hyperscalers, some pressure on cloud margins - especially the "neoclouds" like Coreweave, Nebius, Lambda etc (unless they can be passed along in what is becoming a v competitive market). MU: up 11 out of 12 weeks ... >$325 in pre

Memory: px action wild out of the gates on Friday .. SNDK+16%, MU+10.5%, WDC+9%, LRCX+8%, RMBS+8%, STX+4.4%

TSM rose the most since April, as enthusiasm for artificial intelligence continues to lift the world’s largest contract chipmaker. GS raised their TSM PT 35%

UBER: -1.3% Melius downgrading - "Uber is very clearly the leader in global rideshare and delivery. But given that position, Uber has the most risk from increased competition

Industrials 

CVX an early standout on the developments in Venezuela (only major US oil company still in the country). • COP and XOM also higher, while oil services plays SLB and HAL and refining name VLO have seen some of the biggest gains.

Dover (DOV) upgraded to buy from neutral at UBS

Eaton (ETN) downgraded to neutral from buy at UBS

Emerson Electric (EMR) upgraded to buy from neutral at UBS

Enphase Energy (ENPH) upgraded to sector weight at KeyBanc

Fortive (FTV) downgraded to underperform from outperform at Mizuho

L3Harris (LHX) confirms prior report, to sell majority stake in Space Propulsion & Power Business to AE Industrial Partners at a total EV of $845M

KTOS – New Buy at Jones PT $150

Mobileye Global (MBLY – RVER position) upgraded to overweight from equal weight at Barclays. Also wins major US Deal for 9M Cars.

Pentair (PNR) downgraded to sell from hold at TD Cowen

QXO Inc. (QXO) trading up 7% - QXO announces $1.2B convertible preferred equity investment led by Apollo

Roper Technologies (ROP) downgraded to underperform from neutral at Mizuho

RTX Corp. (RTX) downgraded to neutral from buy at UBS

United Rentals (URI – RVER position) upgraded to buy from neutral at UBS

Latest Media

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