Schaeffer's Trading Floor Blog

Stocks On the Move: Hewlett-Packard Company, Sears Holdings Corp, and 58.com Inc (ADR)

HPQ, SHLD, and WUBA are moving sharply in Thursday's trading

by 8/21/2014 1:25 PM
Stocks quoted in this article:

A round of upbeat economic reports helped send the S&P 500 Index (SPX) to its loftiest perch on record earlier. Among specific equities, three of the day's biggest market movers are tech issue Hewlett-Packard Company (NYSE:HPQ), department store chain Sears Holdings Corp (NASDAQ:SHLD), and online marketplace 58.com Inc (ADR) (NYSE:WUBA). Here's a quick roundup of how HPQ, SHLD, and WUBA are performing on the charts so far.

  • In the wake of its fiscal third-quarter earnings report and subsequent round of bullish brokerage notes, HPQ rallied to a fresh three-year peak of $37.05, but was last seen up 5.2% at $36.94. Year-to-date, shares of Hewlett-Packard Company have been guided higher by their 40-day moving average, resulting in a gain of nearly 32%. Not everyone on the Street is convinced of HPQ's underlying strength, which could help fuel the stock's fire down the road. In fact, more than half of the analysts covering the stock deem it a "hold" or "sell," while the consensus 12-month price target of $36.93 is roughly in line with present trading levels. Simply stated, the door is wide open for an additional round of upgrades and/or price-target hikes.

  • SHLD, meanwhile, is down 7.6% this afternoon, after the company turned in its ninth consecutive quarterly loss. Since hitting a year-to-date high of $45.81 in early May, shares of SHLD have lost almost 28% to linger near $33.15, so it's no surprise to see sentiment tilted toward the skeptical side. In the options pits, the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.20 ranks in the 66th percentile of its annual range, meaning short-term speculators are more put-heavy than usual toward SHLD. Elsewhere, short interest accounts for 30.4% of the stock's available float, and would take about 29 sessions to cover, at Sears Holdings Corp's average daily pace of trading.

  • Beijing-based WUBA is also seeing some post-earnings volatility -- down 7.9% at last check to trade at $46.62, after offering up a dreary current-quarter revenue outlook. In the month leading up to last night's earnings announcement, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) had bought to open almost two calls for every put on WUBA. With short interest accounting for more than 21% of the security's available float, a portion of the recent call buying may have been at the hands of short sellers hedging against any earnings-induced upside. Today -- with 58.com Inc (ADR) on the short-sale restricted list -- puts are the options of choice, outpacing calls by a nearly 2-to-1 margin, and trading at nine times what's typically seen at this point in the afternoon.


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