Why Flat VIX Could be Bullish: Stocks Near Highs & Reacting to ARM, FTNT, DDOG Earnings

本站添加: 2026-05-07

[00:00:00]Let's bring in Kevin Green, senior markets correspondent right away to help set up the action today. All right, KG, let's get your big picture take on the market. We're uh sitting at around all-time highs and it feels like we're just, you know, kind of at the point where we're looking beyond the conflict with Iran and looking for the wind down.

[00:00:15]Your thoughts?

[00:00:17]>> Yeah, I would agree. I mean, we continue to melt up on a day-by-day basis and yesterday we saw more than a 1% move to the in the S&P 500 to the upside. And one thing that I did kind of note uh we saw around 65% of the stocks in the S&P uh in the green yesterday. So you are starting to see a little bit more of a broadening out in this market. I believe utilities and energy were the only two sectors to the downside and you are starting to get maybe that reflation trade or that global economic expansion trade starting to creep back into the picture. out. Not only just looking at communication services or even information technology, but industrial is catching a pretty strong bid. Also materials and keep your eye out on materials because that was a sector that did get beat up a little bit. It only has about a 5% impact, 5.3% impact in the S&P 500, but that's where a lot of the momentum trade actually came into effect early on this year as well as the latter half of last year. You're kind of talking about the metals trade. Uh you're talking about the uranium trade in that respect as well. So that also did catch a little bit of a bid. Now, one thing to also kind of keep your eye out on yesterday, we had that strong move for pretty much all of the indexes.

[00:01:20]Uh, and you actually did see volatility actually remain at a pretty flatline level yesterday. We did not see volatility actually crushed to the downside. Now, there could be two reasons for that. One, we could actually have maybe some individuals starting to put on some hedges because of this aggressive move over the last week. Or we have aggressive call buying activity taking place or call activity just in general. That could be the case. If you're looking at uh around five of the top traded S&P 500 contracts yesterday, they all had over 200,000 contracts being traded for each particular series.

[00:01:52]And that's something I have not actually seen before. So, this is a market that continues to make higher highs, higher lows. We are a little bit stretched when it comes to the technicals, but at the end of the at the end of the day, uh you are seeing this expansion, and that expansion could actually last for a relatively long time. I believe the S&P 500 equal weight also made a new all-time high uh yesterday as well. So, there's a lot of sectors that are still kind of basing and just starting to catch a little bit of momentum. I'm curious to see if the market, traders, investors start to rotate into those sectors and really try to push those higher in order for us to kind of maintain these gains.

[00:02:24]>> All right, let's talk through ARM. Uh that stock was rallying into its results. Uh initial reaction positive, now it's under some pressure. Walk us through your takeaways.

[00:02:35]Yeah, you know, they actually reported a pretty decent uh quarter here. They pretty much met in line with the streets expectations and we did not see their guidance really uh, you know, exceed the the market's expectations. We saw revenue coming in at $1.49 billion.

[00:02:49]That's up 20.1% on a year-over-year basis, beating the estimate uh by around uh two $20 million, if you will. And then the adjusted earnings per share came in at 60 Cent. Street was looking for around 58 cents. Now, the royalty revenue did actually miss the street's expectations, that came in at $671 million, but when you're looking at licensing revenue, that did exceed. Now, the reason for that slight miss when it comes to the royalty revenue is because of the chip shortage. As we see smartphones uh chips being built out, they make a percentage of those chips at that are in production. If we do see a shortage, they're not, you know, companies and fabs are not able to make those chips as fast or in in bulk quantities, that's where we are going to see an impact when it comes to the uh royalty revenue. Now, their ARM AGI CPU uh that is seeing very strong demand. It looks like they have over 2 million uh $2 billion booked for 2027 and 2028. And they did talk about once again the supply constraints, but they're still very bullish when it comes to data center demand. So, you are seeing the shares down a little bit. Uh this is because once again the smartphone exposure uh they don't have the ability to have pricing power. They're making royalties. This is already something that's already been contracted if you will when it comes to pricing that's not very dynamic. So unfortunately there kind of been more of a secular a cyclical trend here uh when it comes to the supply chain and how it can actually impact the topline growth.

[00:04:15]>> Okay, let's talk about a big mover to the upside. Fortnite those shares rallying 15% right now off the back of its results. walk us through your takeaways here.

[00:04:24]>> Yeah, this is actually a really good report and you are seeing demand for cyber security ramp to the upside and that might be because of the fact that a artificial intelligence especially when you're looking at uh let's say a model like mythos uh could actually be a significant threat for a lot of companies and we are starting to see those companies really ramping up their spending at least for seeing that Q1 revenue came in at $1.85 $85 billion.

[00:04:46]That was around a 20% growth on a year-over-year basis. And the adjusted earnings per share came in at 82 cents.

[00:04:52]Also seeing around 41% growth on a year-over-year basis. Now, when you're looking at the Q1 billings, it did exceed the streets expectations coming in at 2.09 billion. And the adjusted operating margin is also coming in at 36%. Their guidance was actually raised to the upside implying around a 15% growth when it comes to topline revenue.

[00:05:11]now and you are looking at a revenue beat or a u an adjustment when it comes to the adjusted earnings per share guidance for fiscal year 2026 that was raised to $310 to $316. That's the range previously was sitting at $2.94 to $3.

[00:05:27]So this is actually a really strong report. uh once again seeing an intense amount of demand here because of the threat of artificial intelligence and they're able to also integrate AI within their cyber security stack as well and that's also been working on working out for them not only gaining new customers but also cross-selling uh and integrating more of their their current uh customers that they have on the books. Uh so it it's interesting to see this uh kind of reinforce the narrative that we've heard about cyber security because one of the things that you know there were some worries about cyber security they were caught up in some of the pressure that we saw uh in the software sector uh but there was the view that they shouldn't have been right um what are you seeing in terms of analyst reaction >> yeah you are seeing some price target increases uh for Fortnite here I'll get the uh the analysts uh expectations here for you. If you look at Morgan Stanley, they did raise their price target up to $80. That's up from $70 here. And Wells Fargo raising their price target up to $70. That's up from $64. The biggest target that I see on the street right now and and a pretty decent re-ra higher is Stifl. They raised their price target to $102 and that's up from $85. So, you are seeing some some optimism here. BTIG raised their uh rating on the stock to a buy from neutral. So once again a lot of bullish analyst notes from this morning price target raises. This I would say you know Diane this kind of changes the narrative here a little bit. We have seen maybe some of these other cyber security names uh being hit on the top line because of the fact that AI spend uh was actually put more towards hardware for a lot of their customers rather than into cyber security. It seems like foret is really not seeing that type of uh redistribution of enterprise spend at least in 2026.

[00:07:14]>> All right let's talk data dog. huge move right now to the upside off the back of its quarterly results. They just released them. Uh the stock is up more than 20% right now. Uh and coming into today, it it hadn't moved much. It was up just 5% coming into today. So, it's setting up for a big move today. Uh and set to add to its year-over-year gains.

[00:07:36]I mean, now year-over-year, it's obviously been a better performer. Uh but walk us through some of the takeaways here off of this quarter. It looks pretty uh impressive here.

[00:07:46]It >> it does. And you are seeing a a massive move to the upside here after the stock has been able to to base out uh for let's say the last month and a half or two months or so. Now, when you're kind of looking at the report, it looks like their uh Q2 revenue outlook is between 1.07 billion and 1.08 billion. And it looks like their outlook for non-GAAP net income per share is between 57 cents and 59 cents. they were able to beat both on the top and bottom line, but the guidance is really the big driver here.

[00:08:15]Uh they are also looking at their fullear revenue between $4.3 billion and $4.34 billion here. Once again, beating the streets expectations. This is actually a really good report once again on the back of the fact that cyber security and and trying to get uh you know a lot of these companies to kind of integrate some of these new tools into their platform continues to be relatively strong here. It looks like they also launched several new AI powered features including MCP server as well as some other product offerings as well that really drove a lot of their growth and they do believe that that's going to be uh something that's going to continue over the next couple of quarters.

[00:08:51]>> Okay. Um before we get to your levels that you're looking at on the S&P 500 today, I'm curious to know your thoughts on oil. We are pulling back once again today approaching $91 a barrel. That'll obviously be good news for consumers at the pump. What are you watching on levels for WTI?

[00:09:10]>> Yeah, we are seeing a pullback. It's down about what 3.4% if you're looking at WTI right now. But I'll go back and I continue to say this has not really officially broken the trend yet. This is still considered a flag pattern. We are making lower highs, but we still have technically higher lows if you're looking at the wicks and also closing prices here. So, I'm still looking at around that 80 to $82 level as your major area of support. And then to the upside, I still think it's actually very possible that we can get back to that 120 level. I mean, the market right now is obviously uh trying to sell off this this energy trade. They are very optimistic when it comes to a peace deal. This is like the fifth or sixth time that we've seen this type of narrative hit the market. And usually uh if we go from the past, we do see oil kind of rerating a little bit higher. I would also kind of call out here from the fundamental standpoint uh we are exporting a significant amount of products out of the United States and in fact this week or if you're looking at last week according to EIA data was the the the largest amount of exports from the United States in order for us to kind of backfill the global supply. Now that's only going to be a temporary solution at this particular pace of exports as well as the draw down uh that we are seeing from the SPR and even private inventory stocks. you are seriously talking about maybe uh you know the the start of fall even the middle of fall where we are going to be at very depressed levels when it comes to overall supply. We are seeing it in distillates. That's why diesel prices are really uh moving higher here and gasoline inventory levels are moving aggressively lower as well. So uh you need to have the narrative uh really fit. You need to have this kind of get across the finish line here. But even if it does, we usually don't see a massive collapse uh when it comes to retail gasoline prices at the pump. Usually it's going to be a gradual decline and that's just because it's going to take a month and a half, two months for us to just get the logistics back online. Not even just talking about the production over in the Middle East. So I think there's still a lot of headwinds here when it comes to the energy trade. Once again, everybody's optimistic. I'm always going to be skeptical, Diane.

[00:11:09]That's my job. And it still seems like there's still a possibility that oil could WTI can still get to 120. Uh and technically speaking, it seems like that could be an effect here.

[00:11:19]Uh besides I know I've told you before I could see you be in risk management even though you've uh poo pooed that. I could absolutely see that. Or a quant trader.

[00:11:29]Anyway, let's talk uh the levels that you're looking out for on the S&P 500.

[00:11:33]What are your targets today?

[00:11:36]>> Yeah, if you're looking at the call flow this morning, 7,400 to the upside is where we are seeing the majority of that call flow. To the downside, it's 7,300 is where you are seeing the put flow.

[00:11:46]But if you look at the GMA exposure, you're looking at around 7310, 7315 as your major area of support. Once again, volatility is actually moving a little bit higher. It was stagnant yesterday.

[00:11:55]We're sitting at around 17.4 for the VIX right now, implying a little bit more than a 1% move to the upside or downside. This is bullish. It continues to be very bullish here. Uh but at the end of the day, we start seeing volatility ramp a little bit higher. If yields move higher, credit spreads move higher along with equities. might be once again maybe a little bit of a rotational type of top here. Doesn't look like that's happening right now, but something to keep on the radar.

[00:12:19]>> Okay, something to keep on the radar.

[00:12:20]Thank you, KG. That is Kevin Green, our senior markets correspondent.