Schaeffer's Trading Floor Blog

Highs & Lows: Cablevision, DISH Network, Cypress Semiconductor, and PulteGroup

CVC, DISH, and PHM enjoyed notable runs higher today, while CY drifted lower

by 10/22/2012 5:12 PM
Stocks quoted in this article:

U.S. stocks went on a volatile ride Monday but ultimately closed near the breakeven point as traders digested earnings reports and other company-specific news. Against this backdrop, the number of stocks that touched annual highs barely eclipsed those reaching new lows. There were 50 new peaks and 25 bottoms on the NYSE, while the Nasdaq tallied 28 new highs, versus 46 lows. Among the names charting notable moves today were Cablevision Systems Corporation (NYSE:CVC - 18.45), DISH Network Corp. (NASDAQ:DISH - 36.63), Cypress Semiconductor Corporation (NASDAQ:CY - 9.89), and PultGroup, Inc. (NYSE:PHM - 17.79).

  • AMC Networks Inc (NASDAQ:AMCX) and partner company CVC resolved a high-profile dispute with satellite media provider DISH. As part of the settlement, AMC channels will return to DISH after a four-month absence, while DISH will pay $700 million to AMCX and CVC. It seems that Wall Street applauded the news, buoying both CVC and DISH to new technical highs. CVC leapt to a 14-month best of $18.85, augmenting its 29.7% year-to-date return. Amid this technical strength, the options pits have had an overwhelming appetite for calls, as evidenced by the stock's 10-day call/put volume ratio of 21.50 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio lands in the 71st percentage of its annual range, implying that traders on these exchanges have purchased calls over puts at a faster-than-usual clip during the past two weeks. However, there could be a less-than-bullish reason for this activity, as short interest makes up a healthy 5.9% of the security's float. Oftentimes, short traders will buy calls as hedges for their pessimistic positions, and this could be what's happening here.

  • Meanwhile, DISH ran to the $36.68 level this morning -- its loftiest price since November 2007. Looking closer at the charts, the shares have outperformed the broader S&P 500 Index (SPX) by 15 percentage points during the past month, and have climbed 28.6% since the beginning of the year. On the sentiment front, the brokerage bunch has yet to fully appreciate DISH's overall upswing. The average 12-month price target of $34.43 represents a $2.25 discount to the stock's multi-year high. Furthermore, more than half of the 15 analysts maintain "hold" or worse ratings for DISH.

  • Exacerbating its 41.4% year-to-date deficit, beleaguered CY slipped to the $9.48 mark -- its lowest point in almost three years. The options arena, however, appears to be optimistic toward the semiconductor issue. During the past 10 days, traders on the ISE, CBOE, and PHLX have bought to open 5.65 calls for every put on the stock. This ratio arrives in the 74th percentile of its annual range, signaling that speculators have scooped up bullish bets over bearish at an accelerated clip recently. Elsewhere on the Street, short interest on the equity advanced 5.7% during the past month, suggesting the recent acceleration in call buying could be related to hedging activity by the shorts. However, the bearish bandwagon is far from crowded, as it would take fewer than two sessions for these pessimistic positions to unwind.

  • Thanks to a steady recovery and recent upbeat data for the U.S. housing market, PHM has been quite a standout on the charts, rocketing more than 182% in 2012, and outpacing the broader SPX by 44 percentage points over the past 60 sessions. But the analyst crowd remains skeptical, which could ignite a contrarian headwind for the shares. There are six "buy" or better endorsements, compared to seven tepid "holds," and a single "strong sell" suggestion. Moreover, the average 12-month price target rests at $15.17, which is a more-than-$3 discount to today's four-year acme of $18.30, tagged this morning.

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