Schaeffer's Trading Floor Blog

Highs & Lows: Capital One, AMD, Chipotle, and Marvell Technology

COF hits a new peak while AMD, CMG, and MRVL fall to new lows

by 10/19/2012 5:13 PM
Stocks quoted in this article:

U.S stocks were sharply lower to close out the week, as investors reeled from a number of high-profile earnings announcements and disappointing existing homes sales. Despite the heavy selling, overall new highs managed to narrowly surpass new lows on the Big Board, at least. The NYSE saw 114 new highs and 33 new lows during the session, while the Nasdaq posted 41 new highs versus 78 new lows. Among the names charting notable moves today were Capital One Financial Corp. (NYSE:COF - 60.75), Advanced Micro Devices, Inc. (NYSE:AMD - 2.18), Marvell Technology Group Ltd. (NASDAQ:MRVL - 7.57), and Chipotle Mexican Grill, Inc. (NYSE:CMG - 243.00).

  • Fighting the broader market's downtrend, COF muscled to a new four-year best of $60.89 after positive third-quarter earnings last night spurred a number of price-target hikes on Wall Street. The stock's year-to-date gain of 43% has not gone unnoticed by options players, who have been stocking up on calls. Schaeffer's put/call open interest ratio (SOIR) for COF stands at 0.72, lower than all but 8% of the past year's readings. What's more, the 10-day call/put volume ratio measuring buy-to-open activity on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) reads 2.30, with more than twice the number of calls being purchased in the past two weeks versus their put counterparts.

  • It was a rough day in the trenches for AMD, which slid 16.8% lower to tag a three-year nadir of $2.17. The semiconductor firm announced layoffs -- along with weak fourth-quarter earnings results -- Thursday afternoon, and a slew of brokerage downgrades followed this morning. Still, the average 12-month price target for AMD, as reported by Thomson Reuters, stands at $3.43, or 58% above the stock's new low-water mark. Further adjustments to the downside could further exacerbate the stock's year-to-date slide of about 60%.

  • Fellow chip name MRVL also suffered a collapse on Friday, giving back more than 14% and pegging a new low of $7.52 in the process. The firm lowered its third-quarter revenue estimates and also announced the resignation of its CFO. Meanwhile, despite a number of downgrades on the heels of this news, there is still a fair amount of complacency on Wall Street. Heading into the session, 10 of 25 analysts following the stock named it a "strong buy," with two "buy" ratings, 13 "holds," and not a single "sell" suggestion. Elsewhere, over the last 10 days, option traders have bought to open nearly eight calls for every put on the ISE/CBOE/PHLX.

  • Rounding out the day, former high-flier CMG stumbled back to a fresh low of $239.54. The stock shed 15% during the session, bringing its year-to-date decline to roughly 28.6%. Again, disappointing earnings followed by negative adjustments among the brokerage bunch were to blame for the stock's dramatic drop. One happy group today was likely short sellers, as short interest accounts for nearly 11% of the stock's float. Options players, on the other hand, may have been licking their wounds; the 50-day call/put volume ratio of activity on the ISE/CBOE/PHLX is just 10 percentage points shy of an annual high, suggesting bullish speculative activity was approaching a peak.

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