Schaeffer's Trading Floor Blog

Midday Market Stats: Dow Jones Industrial Average Slumps On Disappointing Economic Reports

Thermo Fisher Scientific Inc. and Amgen, Inc. plunge after reporting first-quarter earnings

by 4/23/2014 11:59 AM
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The Dow Jones Industrial Average (INDEXDJX:.DJI) is sitting 17.8 points, or 0.11%, south of breakeven at midday, at 16,496.61, following a round of disappointing economic reports. First, the latest data on new home sales showed a sharp decline of 14.5% in March, compared to the modest gain projected by economists. Meanwhile, Markit's preliminary purchasing managers manufacturing index (PMI) dipped to a lower-than-expected 55.4. However, factory output for this month has grown at its fastest rate in three years.

Here are a few noteworthy stats at midday:

  1. The equity put/call volume ratio across all 12 options exchanges stands at 0.79. Roughly 3.07 million calls, compared to about 2.44 million puts, have crossed the tape so far.

  2. Among the names with call-heavy trading activity today is Thermo Fisher Scientific Inc. (NYSE:TMO). At last check, more than 95% of the stock's intraday options volume had changed hands on the call side. On the charts, meanwhile, TMO is down 1.8% to trade at $118.15, despite an upbeat turn in the earnings confessional this morning.

  3. The Nasdaq shows an advance/decline ratio of 0.84, with decliners easily outpacing advancing stocks.

  4. Among the underperformers on the Nasdaq today is Amgen, Inc. (NASDAQ:AMGN), which is down 6% to trade at $112.16, after reporting weak first-quarter earnings results last night.

  5. The CBOE Volatility Index (VIX) is up 1.8% at 13.43 this afternoon, but is still on pace to finish its fourth consecutive session below the 14 mark.

  6. The iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX) is down .02%% to $40.89. Meanwhile, the ETN's put/call volume ratio stands at 1.89, with put volume almost doubling call volume.

View a real-time chart of the Dow Jones Industrial Average (INDEXDJX:.DJI).

Unusual Option Volume

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Analyst Downgrades: Sirius XM Holdings Inc., AT&T Inc., and VMware, Inc.

Analysts downwardly revised their ratings on SIRI, T, and VMW

by 4/23/2014 9:39 AM
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Analysts are weighing in today on streaming music platform Sirius XM Holdings Inc. (NASDAQ:SIRI), telecom specialist AT&T Inc. (NYSE:T), and IT services provider VMware, Inc. (NYSE:VMW). Here's a quick roundup of today's bearish brokerage notes.

  • SIRI -- which is slated to report first-quarter earnings ahead of tomorrow's opening bell -- received a price-target cut to $3.50 from $3.80 at Wunderlich this morning. Since the start of 2014, Sirius XM Holdings Inc. has shed 7.5% to trade at $3.23, and investors have responded by upping the amount of short interest on the stock. During the past two reporting periods, these bearish bets increased by 30%, and now account for 8.3% of SIRI's available float.

  • T reported mixed first-quarter earnings results last night, spurring J.P. Morgan Securities to lower its price target to $34 from $35 this morning. (Meanwhile, Cowen and Company upped its price target by $1.) On the charts, AT&T Inc. has shed 3.9% out of the gate today to trade at $34.89, and is now sitting almost 1% below its year-to-date flat line. As such, the equity may see some downgrades in the near term, which could place additional pressure on the shares. At last check, T maintained nine "strong buy" endorsements, 15 "holds," and just one "strong sell" recommendation.

  • Last night, VMW forecast a narrower operating margin for the current quarter, and in response, a handful of brokerage firms downwardly adjusted their positions on the stock. This includes Barclays and Cowen and Company, which both slashed their price targets by $3 to $114 and $107, respectively. Meanwhile, on Main Street, short interest on VMware, Inc. accounts for roughly 23% of its available float. It would take nearly eight sessions to cover these bearish bets, at the shares' average pace of trading. Furthermore, VMW shares have plunged 10% already this morning to trade at $94.55.

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Analyst Upgrades: Yamana Gold Inc. (USA), The Walt Disney Company, and McDonald's Corporation

Analysts upwardly revised their ratings on AUY, DIS, and MCD

by 4/23/2014 9:26 AM
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Analysts are weighing in today on gold miner Yamana Gold Inc. (USA) (NYSE:AUY), entertainment powerhouse The Walt Disney Company (NYSE:DIS), and fast-food giant McDonald's Corporation (NYSE:MCD). Here's a quick roundup of today's bullish brokerage notes.

  • Davy Research upgraded AUY to "outperform" from "neutral" this morning, despite the shares falling 27.5% from their March 14 intraday high of $10.70 to their current price of $7.76. Elsewhere, other members of the brokerage crew are bullish toward Yamana Gold Inc. (USA), as well, with nearly three-fourths of the covering analysts dishing out "buy" or better endorsements. Furthermore, the average 12-month price target of $11.34 represents expected upside into territory not explored by AUY since September.

  • DIS -- which is up 13.7% from its Feb. 3 year-to-date low of $69.85 to perch at $79.45 -- received a price-target lift to $82 at Morgan Stanley in pre-market trading. Meanwhile, on Main Street, The Walt Disney Company has seen 36.4 million shares sold short, which is equivalent to 5.3 sessions' worth of pent-up buying demand, at the stock's average pace of trading. This means there is a significant amount of sideline cash available, and if DIS continues to make headway on the charts, a rush of short-covering activity could add fuel to the stock's rally.

  • Jefferies weighed in on MCD, following the company's first-quarter earnings announcement yesterday morning. To be specific, the brokerage firm lifted its price target to $95 from $91 last night. (Meanwhile, Morgan Stanley cut its price target by $2.) On the charts, McDonald's Corporation has been a technical laggard, sitting 0.4% lower on a year-over-year basis to trade at $99.32; however, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.65 ranks lower than all comparable readings from the past year, showing short-term speculators are more call-biased toward MCD now than at any other time during the past 12 months.

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Buzz Stocks: BP plc (ADR), Allergan, Inc., JetBlue Airways Corporation, and Toyota Motor Corp (ADR)

Today's stocks to watch in the news include BP, AGN, JBLU, and TM

by 4/23/2014 8:57 AM
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The stock market is little changed ahead of the open, despite earnings reports from a pair of Dow components and several other large-cap firms. In company news, here are some stocks to watch today:

  • BP plc (ADR) (NYSE:BP) has sold its interests in four Alaskan oilfields to privately held energy concern Hilcorp. The transaction includes BP's entire stake in the Endicott and Northstar fields, as well as a 50% interest in both the Liberty and Milne Point fields, which cumulatively account for about 15% of BP's net output on the North Slope, at 19,700 barrels per day. (Reuters)

  • In the face of a hostile takeover attempt from Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and Pershing Square Capital Management LP, Allergan, Inc. (NYSE:AGN) has adopted a poison pill. Specifically, the Botox maker announced last night that if any unauthorized investor accumulates more than 10% of AGN's outstanding shares, existing stockholders will be granted the right to purchase additional shares at a discount. (MarketWatch)

  • A decision by JetBlue Airways Corporation (NASDAQ:JBLU) pilots to join the Air Line Pilots Association (ALPA) has ended the carrier's reign as the largest nonunion U.S. airline. According to ALPA, more than 70% of the pilots who participated cast their votes in favor of union representation, after similar efforts failed in 2009 and 2011. (Bloomberg Businessweek)

  • For the third straight quarter, Toyota Motor Corp (ADR) (NYSE:TM) outsold its automaker peers, with sales rising 6% year-over-year to nearly 2.6 million units from January through March. Running neck-and-neck in second place were General Motors Company (NYSE:GM) and Volkswagen, with sales of roughly 2.4 million units each. (Bloomberg Businessweek)

  • Also, The Boeing Company (NYSE:BA), The Procter & Gamble Company (NYSE:PG), Delta Air Lines, Inc. (NYSE:DAL), and Yum! Brands, Inc. (NYSE:YUM) reported quarterly earnings. (CNBC; USA Today; MarketWatch)

  • Finally, Meb Keflezighi, winner of the 2014 Boston Marathon, claims his age cost him a shoe deal with Nike Inc (NYSE:NKE) three years ago. "I'm almost 39 years old and Nike thought I was probably too old," said Keflezighi, who is currently sponsored by Skechers USA Inc (NYSE:SKX). (CNBC)

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Options Check-Up: First Solar, Inc., Yahoo! Inc., and EMC Corporation

Analyzing recent option activity for FSLR, YHOO, and EMC

by 4/22/2014 4:48 PM
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Among the stocks attracting attention from options traders lately are alternative energy provider First Solar, Inc. (NASDAQ:FSLR), Internet powerhouse Yahoo! Inc. (NASDAQ:YHOO), and virtual infrastructure provider EMC Corporation (NYSE:EMC). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on FSLR, YHOO, and EMC.

  • FSLR is up more than 30% year-to-date, after jumping 2.8% today to close at $71.12. Nevertheless, speculators at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought long puts (relative to long calls) at a faster-than-usual speed during the past two weeks. In fact, on these exchanges, FSLR's 10-day put/call volume ratio of 0.55 ranks in the bearishly skewed 71st annual percentile. Furthermore, Schaeffer's Volatility Index (SVI) for First Solar, Inc. comes in at 61%, which ranks in the 43rd percentile of its 12-month range. This means short-term FSLR options are slightly more affordable than usual, from a volatility perspective.

  • YHOO, on the other hand, has caught the attention of option bulls of late. During the past two weeks, the stock racked up an ISE/CBOE/PHLX call/put volume ratio of 4.50, which ranks higher than 80% of comparable readings from the past year. In other words, speculators have bought to open calls over puts at an accelerated pace recently. This makes sense, considering earlier this month, Yahoo! Inc. used its 50-week moving average as a springboard, advancing 12.4% from its April 11 year-to-date low of $32.15 to its current perch at $36.14. What's more, short-term YHOO options are attractively priced right now, relatively speaking, as the equity's SVI of 35% ranks in the bottom 35% of its 12-month range.

  • Finally, option traders have upped the bearish betting on EMC, ahead of the company's first-quarter earnings report tomorrow morning. To be specific, EMC Corporation's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.87 ranks in the 82nd annual percentile, demonstrating puts have been scooped up, relative to calls, at an increased rate in recent sessions. Leading up to the quarterly event, short-term EMC options are priced at a relative discount, with the stock's SVI of 23% ranking in the 39th percentile of its 12-month range. Meanwhile, on the charts, EMC shares are sitting 4.4% lower on a one-month basis to trade at $26.76.

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