Schaeffer's Trading Floor Blog

Technical Woes Can't Shake Optimism Toward Gogo Inc (GOGO)

GOGO could run into contrarian headwinds if its longer-term downtrend resumes

by 4/17/2014 2:22 PM
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Call buyers have been coming out in full force in Gogo Inc's (NASDAQ:GOGO) options pits lately. In the last week on the International Securities Exchange (ISE) and Chicago Board Options Exchange (CBOE), the in-flight Internet provider has racked up a call/put volume ratio of 59.89. In other words, almost 60 calls have been bought to open for every put in the previous five trading days.

Even from a wider perspective, traders lean heavily toward long calls over puts. GOGO's 10-day ISE, CBOE, and NASDAQ OMX PHLX (PHLX) call/put volume ratio registers at 22.86. For comparison, this ratio -- which is the highest reading since early November -- was just 9.76 on April 1. (Of course, a portion of these long calls may be at the hands of short sellers trying to hedge their bearish positions, as short interest makes up over 35% of the stock's float.)

Also tilting in a call-skewed direction is GOGO's Schaeffer's put/call open interest ratio (SOIR) of 0.32. In a nutshell, this ratio indicates call open interest more than triples put open interest among options expiring in the next three months. For comparison, GOGO's SOIR to start the year was a relatively even 1.10, with short-term puts actually outnumbering calls by a slim margin.

Optimism extends beyond the equity's options pits, as well. Most notably, the shares' consensus 12-month price target rests at $26.67, which represents a considerable premium to the current price of $17.62.

Technically speaking, the stock has plummeted 29% on a year-to-date basis, and has underperformed the broader S&P 500 Index (SPX) by close to 33 percentage points in the last three months. What's more, although the shares are up nearly 4% in today's session on an upgrade to "overweight" from "neutral" at J.P. Morgan Securities, they are battling with overhead resistance at their descending 10-day moving average. If the stock's technical struggles resume, a shift in sentiment among option traders and/or analysts could push Gogo Inc (NASDAQ:GOGO) even lower.


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Midday Market Stats: Dow Jones Industrial Average Waffles On Mixed Earnings, Economic Data

Fundamental news produces big moves in RadioShack Corporation and SanDisk Corporation

by 4/17/2014 12:03 PM
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The Dow Jones Industrial Average (INDEXDJX:.DJI) has been waffling above and below breakeven today, with investors feeling uncertain after the latest set of earnings reports. At last check, the Dow was 23.4 points lower at 16,401.47. In economic news, weekly jobless claims rose by 2,000 to a seasonally adjusted 304,000 last week, but finished well below economists' average estimate. Elsewhere, the Philadelphia Fed's manufacturing survey revealed better-than-expected business conditions in April.

Here are a few noteworthy stats at midday:

  1. The equity put/call volume ratio across all 12 options exchanges checks in at 0.80, with calls outweighing puts. Currently, 4.71 million calls are on the tape, compared to 3.78 million puts.

  2. Among the equities with notable call volume is RadioShack Corporation (NYSE:RSH), which has plummeted nearly 14% to $1.46, and earlier hit a record low of $1.45. This downside move follows news of difficulties in the electronics guru's store-closing plan. With the stock's value approaching zero, over 77% of RSH's options volume has crossed on the call side.

  3. The Nasdaq Exchange shows an advance/decline ratio of 1.22, with advancing stocks besting decliners.

  4. One of the Nasdaq's big advancers at midday is SanDisk Corporation (NASDAQ:SNDK), which has jumped 10.4% to trade at $83.70 following a first-quarter earnings beat reported last night. The data storage expert also upped its gross margin target range for 2014.

  5. The CBOE Volatility Index (VIX) has slipped 0.6 point, or 4%, to 13.62, and earlier dipped below 13.50 -- a level not breached on a daily closing basis in two weeks.

  6. The put/call volume ratio on the iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX) -- 0.7% lower at $42.05 -- is 0.70, with call volume outweighing put volume.

View a real-time chart of the Dow Jones Industrial Average 2 Minute (INDEXDJX:.DJI).

Unusual Option Volume at Midday


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Analyst Downgrades: Google Inc, Bank of America Corp, and Barrick Gold Corporation (USA)

Analysts downwardly revised their ratings on GOOGL, BAC, and ABX

by 4/17/2014 9:35 AM
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Analysts are weighing in today on global technology giant Google Inc (NASDAQ:GOOGL), financial heavyweight Bank of America Corp (NYSE:BAC), and gold miner Barrick Gold Corporation (USA) (NYSE:ABX). Here's a quick roundup of today's bearish brokerage notes.

  • After reporting weaker-than-expected earnings results for the first quarter last night, GOOGL received a handful of bearish brokerage notes. Among the critics on Wall Street were RBC and Deutsche Bank, which both slashed their price targets by $40 to $670 and $625, respectively. Since Google Inc's 2-for-1 split at the beginning of the month, the stock has shed 7% to trade at $547.74; however, 25 of the 29 covering analysts are holding on to "buy" or better endorsements. Furthermore, the average 12-month price target of $670.40 towers over GOOGL's current price.

  • BAC may have hit a technical speed bump following its less-than-stellar first-quarter earnings report yesterday morning -- which led Jefferies to cut its price target to $18.50 from $20 in overnight trading -- but the stock still boasts a year-over-year gain of nearly 37% to trade at $16.03. Elsewhere, sentiment toward Bank of America Corp is more bearish than bullish, with 14 analysts dishing out "hold" or worse suggestions, and just seven awarding the stock "buy" or better endorsements. Should Bank of America Corp resume its long-term uptrend, the other critics on Wall Street may have a change of heart, which could create additional technical tailwinds for the shares.

  • ABX -- which has lost 12.4% over the past month to trade at $18.32 -- received a price-target cut to C$20 from C$20.50 at Canaccord Genuity this morning. Meanwhile, option traders have placed bullish bets over bearish at a near-annual-high rate during the past two weeks, as evidenced by Barrick Gold Corporation's (USA) 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 8.46, which ranks just 4 percentage points from a 12-month peak.

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Buzz Stocks: Yahoo! Inc., Amazon.com, Inc., Post Holdings Inc, and Sony Corp (ADR)

Today's stocks to watch in the news include YHOO, AMZN, POST, and SNE

by 4/17/2014 9:25 AM
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Futures are pointed lower ahead of the bell, as investors process a glut of earnings data from a number of blue-chip names. In company news, here are some stocks to watch today:


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Analyst Upgrades: QUALCOMM, Inc., Netflix, Inc., and The Walt Disney Company

Analysts upwardly revised their ratings on QCOM, NFLX, and DIS

by 4/17/2014 9:22 AM
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Analysts are weighing in today on digital communications expert QUALCOMM, Inc. (NASDAQ:QCOM), streaming content provider Netflix, Inc. (NASDAQ:NFLX), and entertainment heavyweight The Walt Disney Company (NYSE:DIS). Here's a quick roundup of today's bullish brokerage notes.

  • Stifel lifted its price target on QCOM to $83 from $80 this morning, as the shares have advanced nearly 8% in 2014 to trade at $80.18. Options activity on QUALCOMM, Inc. has been relatively bullish recently, as well. The equity sports a 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 5.07, with calls bought to open outnumbering puts by a margin of 5-to-1. What's more, this ratio ranks just 2 percentage points from a 12-month peak, pointing to a near-annual-high rate of call buying, relative to put buying, during the past two weeks. Looking ahead, QCOM will report fiscal second-quarter earnings after next Wednesday's close.

  • NFLX -- which will head into the earnings confessional Monday evening -- saw its stock's rating upgraded to "outperform" from "sector perform" at Pacific Crest earlier today. Ahead of the quarterly event, Netflix, Inc.'s short-term option traders are trading calls over puts at an annual-high rate, as the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.77 ranks the lowest of all other comparable readings taken during the past year. This may come as a surprise, considering NFLX shares are down 27.6% from their March 6 record high of $458 to trade at $331.41.

  • Overnight, Evercore upped its price target on DIS to $85 from $80, ahead of the company's Investor Day at ESPN this afternoon. On the charts, The Walt Disney Company has had a slow first half of the month, currently sitting just 1.4% below its month-to-date flat line, at $78.95. Regardless, the brokerage bunch has handed out 13 "buy" or better endorsements on the stock, compared to nine "holds" and not a single "sell" suggestion. Furthermore, the average 12-month price target among analysts comes in at $82.52, denoting a slight premium to the shares' current price.

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