The Daily Breakdown looks at the market after a more narrow trading range on an in-line CPI report. Arista Networks looks to hold support.
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What’s Happening?
Markets are moving lower this morning after a somewhat “calm” day on Wednesday. After an in-line CPI inflation report, the S&P 500 carved out its second smallest trading range this month. The takeaway is simple: inflation is making little progress toward the Fed’s 2% goal, but the lack of an upside surprise helped calm investors’ nerves. When it comes to inflation, oil prices will ultimately be the big question mark moving forward.
Buckle Up
Wednesday’s calm could prove temporary. The Fed is due up next week, and by the time policymakers meet, they’ll have a fresh stack of inputs: the PCE inflation report — their preferred gauge — the latest Q4 GDP update, and the JOLTS report. All of these reports are due up on Friday morning.
Crypto Corner
Bitcoin is back above $70K, with Ethereum, Shiba, and other majors rebounding as well. Compound, Internet Computer, and Berachain were some of Wednesday’s top gainers.
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The Setup — Arista Networks
Like Marvell, Broadcom, and others, Arista Networks is also part of the AI ecosystem. While the stock has been volatile over the past year, its technical aspects are holding up relatively well.
That’s as ANET stock is trading above its 50-week moving average (roughly equivalent to the 200-day moving average), as well as the $120 level, which has been a key support resistance zone going back to 2024. If prices stay above $120, bullish momentum can continue. However, a break below this level could usher in a new wave of bearish momentum.
Options
Investors who believe shares will move higher over time may consider participating with calls or call spreads. If speculating on a long-term rise, investors might consider using adequate time until expiration.
For investors who would rather speculate on the stock decline or wish to hedge a long position, they could use puts or put spreads.
To learn more about options, consider visiting the eToro Academy.
What Wall Street’s Watching
FICO
FICO shares hit new 52-week lows on Wednesday and have now fallen more than 20% this week. The latest issue? Experian and Equifax announced aggressive below-market pricing for VantageScore 4.0, a direct rival to FICO in the critical US mortgage market, threatening one of the company’s most profitable segments. The stock had previously struggled amid AI disruption fears. Analysts have a $2,070 price target on FICO, implying roughly 77% upside.
HIMS
Hims & Hers stock is extending its surge on news that Novo Nordisk will distribute Ozempic/Wegovy via the platform, easing a legal battle between the two firms. Shares are up about 65% from Friday’s close and are hitting a one-month high amid the rally. Check out the charts for HIMS.
DG
Shares of Dollar General are down slightly this morning, despite the retailer delivering a top- and bottom-line beat for its fourth-quarter results. Further, comp-store sales of 4.3% topped expectations of 3.5%. The problem? Guidance. Management’s full-year earnings and comp-store outlook was slightly below consensus expectations. Dig into the fundamentals for DG.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.