Schaeffer's Trading Floor Blog

Highs & Lows: AOL, Yahoo!, and UBS

AOL, YHOO, and UBS have all achieved new annual highs today

by 11/6/2012 1:10 PM
Stocks quoted in this article:

As the country prepares for a collective sigh of relief at the conclusion of another presidential election, stocks are trading solidly higher. As a result, the number of new highs is easily trouncing the new lows being pegged. There have been 112 new peaks to just 9 new nadirs on the NYSE today, while the Nasdaq has seen 41 new highs and 33 new lows, including THQ Inc. (NASDAQ:THQ). Among the stocks reaching new highs are AOL, Inc. (NYSE:AOL - 40.89), Yahoo! Inc. (NASDAQ:YHOO - 17.45), and UBS AG (USA) (NYSE:UBS - 15.70).

  • After reporting a pop in third-quarter income, AOL has spiked more than 15% higher today, tagging a new record peak of $41.80 and bringing its year-to-date gain to nearly 174%. Even amid this strong price action, short-term option players have been bearishly aligned. The stock's Schaeffer's put/call open interest ratio (SOIR) of 0.98 indicates calls and puts are nearly at parity for options expiring within the next three months. What's more, this ratio is higher than 80% of the past year's readings. Also, 50% of analysts following AOL rate it a "hold" or worse, paving the way for future upgrades that could spark additional buying power.

  • Although YHOO has been in a fairly tight 52-week range of $14.35 to $17.50 -- and is up only 10.7% during the last year -- the shares widened the upper end of their range today with a move to a new annual peak. Analysts remain wary of the Internet name, as 19 of 25 analysts following the stock still name it a "hold" or "sell," and the consensus 12-month price target is just a slight premium to today's fresh summit, at $18.74.

  • Barclays upgraded UBS this morning, citing the company's strategic changes and restructuring plans. The firm also upped its price target, and others may soon follow -- the consensus outlook of $13.65 is significantly below the stock's new high of $15.75, pegged earlier today. With a healthy year-to-date gain of nearly 33%, the stock's relative strength index (RSI) reading weighs in at 72, suggesting the financial stock could be approaching overbought territory and due for a consolidation. Meanwhile, bearish speculators have been active of late on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), lifting the stock's 10-day put/call volume ratio to 2.87, nine percentage points shy of an annual high. In other words, option traders have been buying to open put positions at a faster pace than usual.

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