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Bears Flock Toward Eagle Bulk Shipping

Today's plunge has EGLE testing support at its 100-day moving average

by 5/2/2012 11:30:16 AM
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Options players on the International Securities Exchange (ISE) and Chicago Board Options Exchange (CBOE) have preferred puts over calls on Eagle Bulk Shipping Inc. (EGLE - 1.39) during the previous five sessions. Traders on these exchanges have bought to open 1,255 puts, versus a measly 68 calls. As a result, EGLE's five-day put/call volume ratio currently stands at a bearishly biased 18.5.

It appears that this passion for puts has been building in recent months, with the stock's 50-day ISE/CBOE/NASDAQ OMX PHLX (PHLX) put/call volume ratio docked at a lofty 5.06. What's more, this ratio ranks higher than 91% of other similar readings taken in the past year, suggesting that puts are being bought to open over calls at a near annual-high pace -- despite EGLE's low share price.

Elsewhere, the equity's Schaeffer's put/call open interest ratio (SOIR) of 2.32 reveals that put open interest more than doubles call open interest among options slated to expire within the next three months. This ratio ranks in the 86th percentile of its annual range, implying that short-term speculators are more put-heavy than usual toward the stock.

This pessimistic posturing is not relegated strictly to the options pits, however, with short interest sitting at an impressive 16.3% of the stock's available float. Plus, in addition to the average 12-month price target of $1.23 representing a discount to yesterday's closing price of $1.49, 100% of analysts maintain a "hold" or "sell" suggestion on the stock.

Daily Chart of EGLE since January 2012 with 100-Day Moving Average

From a technical perspective, the stock is down a dismal 54.8% on a year-over-year basis. EGLE has attempted to elbow its way back up the charts in 2012, tacking on 58.2% since the start of the year. However, the security has dropped in today's session, and is down more than 6% at last check. Today's latest dive has the stock testing support atop its 100-day moving average -- a trendline that has not been breached on a daily closing basis since Feb. 2.

Should EGLE continue with its overriding technical struggle, additional bears may be encouraged to climb on board -- further stunting the stock's price action in the short term.

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