Market 2017-12-18 (TWTR, TSLA, MCK, and more)

The market melt-up continues. Tech Sector performs extremely well today.

Most important events this week:

  • Tax Reform vote will be held tomorrow or Wednesday. McCain will not join GOP (R:D = 51:48 now). 
  • Congress also need to reach the Budget agreement to avoid Government Shutdown.


Winners (too many to mention)

TWTR +11.1%, upgraded by JPM to overweight with $27 PT. Analyst Doug Anmuth’s predictions for 2018 include improvements in video and live streaming, a 10% DAU growth, an 8% ad revenue growth, and reaching GAAP profitability. I am not sure how many DAU are bots, no matter from Russia or North Korea or Iran or whatsoever. I am not convinced by the "10% DAU growth" prediction, which would be the key to support such valuation. Next ER will tell us more.

JPMorgan also raises Amazon (AMZN +1%) to $1,375. Facebook (FB +0.4%) to $225 and Priceline (PCLN +1.2%) to $2,050. 

Jefferies PT hikes on mall stocks: American Eagle Outfitters (AEO +4.8%) to $22 from $20, Abercrombie & Fitch (ANF +6.7%) to $17 from $14, Boot Barn (BOOT +6.3%) to $20 from $13, Gap (GPS +2.6%) to $45 from $41, Michael Kors (KORS +2.5%) to $75 from $62, Kohl’s(KSS +3.8%) to $58 from $48, Urban Outfitters (URBN +5.2%) to $40 from $34. M +5.1%, JWN +2.5%.

VIPS +39.2%. Tencent will invest $604M for a 7% stake, and JD (+3.4%) will invest $259M to increase its stake from 2.5% to 5.5%, in order to compete with BABA (-0.1%).

China’s Nextview New Energy Lion P-E fund agrees to acquire Canadian lithium producer Lithium X for $C265M (US$206M), the latest move by Chinese companies to secure battery raw materials. Lithium X has two lithium projects in Argentina’s Salta province, as well as a stake in Pure Energy Metals, which is developing a lithium project in Nevada. LIT +2.6% today.

Losers

TSLA -1.3%. Model 3 production is way behind promises. Now more problems surface. Here are some comments from early buyers: "Some of the exterior panels weren't as perfectly aligned as I'd like them to be ... More than acceptable in my opinion ... I did have to slam the driver’s door a little harder than I would like to in order for it to fully close though." "I was a little underwhelmed with how the large center screen controls everything ... Needing to look to my right for every bit of information, as well as to activate accessories while driving, just doesn’t seem all that safe." "The view out of the rear window of the car really is not that good. I realized this when I couldn’t tell if there was a car behind me or not when stopped at a traffic light at night."

Biotech is still weak (IBB -0.2%): MCK (-1.4%) was reported on CBS' 60 minutes yesterday, which is usually a bad thing! DEA is disappointed with the DOJ-MCK settlement in Opioid Distribution Case. EVP & CFO will leave. GILD -0.5%, BIIB -0.6%, CELG -1.3%; CVS -1.8%


My Trades Today

Sold 40% M @ $25.9. It seems M is facing $26 resistance after breaking out $22 several days ago. I decide to lock some profit.

Sold 50% LIT @ $39.8.

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