Schaeffer's Trading Floor Blog

Highs & Lows: Intel, Campbell Soup, and H.J. Heinz

INTC dropped to a new annual low, while CPB and HNZ marched to new highs

by 11/19/2012 2:06 PM
Stocks quoted in this article:

As fiscal-cliff anxieties subside and investors digest upbeat housing data, the broader equities market is comfortably higher today. Against this backdrop, however, the number of equities reaching new tops is nearly at parity with those at new lows. Currently, the NYSE counts 45 new highs and 16 bottoms, while the Nasdaq tallies 19 peaks and 36 new nadirs. Among the stocks charting notable moves are Intel Corporation (NASDAQ:INTC - 20.12), Campbell Soup Company (NYSE:CPB - 36.92), and H.J. Heinz Company (NYSE:HNZ - 58.22).

  • Tech giant INTC announced this morning that CEO Paul Otellini -- who stepped into the role in 2005 -- will retire much earlier than expected. The company said the decision was solely Otellini's, saying that he believes it is time for new leadership at Intel. The shares popped initially on the news, but quickly dove to a 14-month low of $19.73, exacerbating the shares' 17.1% year-to-date deficit in the process. Regardless of this weak price action, there is a glut of calls in the options pits, as evidenced by the stock's 10-day call/put volume ratio of 2.57 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio arrives in the 85th percentile of its annual range, signaling that traders have purchased bullish bets over bearish at a faster pace than usual during the past couple of weeks. However, there could be an ulterior motive to this call-heavy activity. Short interest swelled 12.6% during the past month, and with buy-to-open call volume and short interest rising in tandem, it's possible that short sellers are scooping up optimistic options to hedge their pessimistic positions.

  • Next up CPB is looking more and more appealing, as its shares have enjoyed an 11.1% rise in 2012, and have outperformed the S&P 500 Index (SPX) by 12 percentage points over the past 40 trading days. Feeding on this upbeat momentum, the stock jumped to a more than two-year best of $37.16 earlier today. In fact, the security could see higher highs in the near term, especially if the skeptically skewed brokerage bunch buys into CPB's overall uptrend. The average 12-month price target of $34.86 is a $2.30 discount to today's fresh multi-year peak. Plus, out of the 18 analysts following the soup maker, just one considers it a "strong buy."

  • Campbell Soup sector peer HNZ surged to a record high of $58.86 today, building up its modest 7.9% year-to-date return. Elsewhere on the Street, the stock's Schaeffer's put/call open interest ratio (SOIR) checks in at 0.48, conveying that calls more than double puts among options expiring within three months. But this recent trend toward calls may not be as upbeat as it initially appears. Over the most recent reporting period, short interest inched higher and now accounts for 4.5% of the security's float. Therefore, it's possible that a portion of the recent call volume was the result of hedging activity by the shorts.

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