Schaeffer's Trading Floor Blog

Highs & Lows: Hewlett-Packard, Yahoo!, Comcast, and Dendreon

YHOO and CMCSA shot higher, while HPQ and DNDN sank lower

by 10/31/2012 4:42 PM
Stocks quoted in this article:

After an extended absence due to the wrath of Superstorm Sandy, Wall Street bounced back and the major indexes were up and running today. Out of the gate, stocks were on the rise, as if stretching their legs after too much inactivity. But this early pop would not last. By the close, equities were basically flat on the day. Against this backdrop, though, the overall number of stocks notching new annual highs surpassed those dropping to new bottoms. There were 124 new peaks and 46 lows on the NYSE today, while the Nasdaq tallied 70 new highs and 70 lows. Among the names charting notable moves were Hewlett-Packard Company (NYSE:HPQ - 13.85), Yahoo! Inc. (NASDAQ:YHOO - 16.83), Comcast Corporation (NASDAQ:CMCSA - 37.53), and Dendreon Corporation (NASDAQ:DNDN - 3.80).

  • Tech giant HPQ started the abbreviated week off a sour note, tumbling to a ten-year worst of $13.80. Taking a closer look at the technical setup, we see this downtrend is par for the course. On a relative-strength basis, the stock has lagged the broader S&P 500 Index (SPX) by 24 percentage points over the past 60 sessions, while it has burned off 46.2% since the beginning of the year. Despite this deficit, HPQ is still seeing plenty of call activity, as evidenced by the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.77, confirming that calls outnumber puts among options slated to expire within three months. This ratio ranks in the 25th percentile of its annual range, suggesting short-term options players have been more call-heavy just 25% of the time during the past year. However, short interest spiked some 35% over the past month, hinting at potential hedging by the shorts. With buy-to-open call volume and short interest rising in tandem, it's possible that short sellers are picking up optimistic options simply to protect their pessimistic positions.

  • Moving on another big-name tech company reached an annual milestone. Looking to bolster its modest 4.3% year-to-date gain, YHOO reached the $16.89 mark today -- its loftiest perch since May 2011. The shares could enjoy an added boost in the near term, as the short traders seem to be relaxing their bearish grip. Over the past two reporting periods, short interest deflated 30% and now accounts for 2.4% of the security's float. Elsewhere, the skeptical analyst crowd could have a change of heart, should YHOO extend its trek higher. Currently there six "buy" or better endorsements, 18 middling "holds," and one "sell" recommendation.

  • CMCSA has been a standout on the charts, soaring 58.3% in 2012, and outperforming the SPX by nearly 12 percentage points throughout the past 40 sessions. In fact, augmenting this positive price action, the shares clenched an all-time best of $37.85 today. On the sentiment front, pessimism is alive and well in the options arena, as the equity's SOIR arrives at 1.98, indicating that puts almost double calls among options slated to expire within three months. What's more, this ratio ranks in the 90th percentile of its annual range, suggesting that short-term options players have seldom been more put-heavy during the past year.

  • Finally, biotech firm DNDN's technical predicament looks likely to worsen, as the stock retreated to a more than three-year low of $3.69. In light of the security's 50% year-to-date pullback, short sellers are ramping up their positions. Short interest increased 8.8% during the past month, and now makes up 32.1% of the available float. At DNDN's average pace of trading, it would take more than three weeks for all of these pessimistic positions to unravel.

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