Schaeffer's Trading Floor Blog

Highs & Lows: Teva Pharmaceutical, Best Buy, and Tellabs

TEVA, BBY, and TLAB retreated to new lows

by 12/27/2012 2:06 PM
Stocks quoted in this article:

Today's resumed budget talks are ramping up investor anxiety, as U.S. indices are sagging considerably in the red. A mixed bag of economic data -- including a drop in first-time jobless claims and a dip in consumer confidence -- hasn't helped to draw attention away from the looming fiscal cliff. While the Dow and SPX 500 Index (SPX) try to avoid a fourth straight day of losses, the number of equities at new lows is nearing parity with those at new highs. There are currently 26 bottoms and 34 peaks on the NYSE -- most notably an 18-month best for Bank of America Corp (NYSE:BAC - 11.30). Meanwhile, the Nasdaq counts 24 lows and 18 tops. Among the names charting notable moves are Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA - 36.84), Best Buy Co., Inc. (NYSE:BBY - 11.31), and Tellabs, Inc. (NASDAQ:TLAB - 2.32).

  • Biotech concern TEVA took a dive to the $36.75 level earlier today, marking its worst price in over 14 months. With today's pullback, the shares are now looking at an 8.6% drop for the year. In fact, TEVA's downtrend has been pressured by its 10-month and 20-month moving averages, which have acted as resistance since February 2011. TEVA's technical predicament has also begat bearishly biased sentiment, as half of the 26 covering analysts have handed out "hold" ratings.

  • BBY has succumbed to today's broad-market headwinds, and drifted to a 12-year low of $11.20, pulling its year-to-date deficit to a grisly 51.5%. On a relative-strength basis, the shares have lagged the SPX by a whopping 32 percentage points during the past three months. On the sentiment front, only one out of 20 analysts considers BBY worthy of a "strong buy" recommendation. Meanwhile, short traders are tightening their grip on the struggling retailer. Over the past two reporting periods, short interest has ballooned by 27%, and now makes up 12.7% of the equity's float. But there's plenty of room for more bears to play BBY's overall weakness, as it would take just over two sessions for these pessimistic positions to unwind.

  • It's been a rough 2012 for TLAB, as the shares have burned off 42% since January, and underperformed the SPX by 30 percentage points over the past 60 days. What's more, the stock notched a third consecutive day of multi-year lows this afternoon, spiraling to an almost 20-year nadir of $2.30. The Street doesn't appear to be too optimistic for TLAB, as all 10 analysts following the telecom services provider have doled out "hold" or worse suggestions. Plus, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) reveals a 10-day put/call volume ratio of 14.04, which shows that 14 puts have been bought to open for every call during the past two weeks.

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