A daily feature available on SchaeffersResearch.com is "Street Chatter." Every day, we'll focus on three newsworthy stocks that are generating a lot of attention on Internet message boards. By digging into the stock's option activity and trading performance, we hope to shed some light on the securities. The focus of today's feature is The Titan Corporation, Research in Motion Limited, and BEA Systems .
Information technology company, The Titan Corporation (TTN: sentiment, chart, options) , is on the minds of investors this morning thanks to a report that the gigantically named company has been in talks to be acquired by L-3 Communications Holdings (LLN: sentiment, chart, options) . Today's greater-than-one-dollar gain is simply a continuation of yesterday's six-percent hike up Mount Olympus. The Wall Street Journal reported on its website that TTN abruptly cancelled a previously planned presentation to investors in Canada, the U.S., and Europe (that was scheduled to start today). This has helped fuel the speculation that a deal with LLL or another company could be imminent. TTN is a prime target for expansion from companies that want to moved into the communications and computer-services field for the Pentagon and intelligence agencies. TTN provides the computer and communication system services, network security, and systems engineering mainly to the U.S. government (a little more than 95 percent of TTN's sales). Last year, Lockheed Martin (LMT: sentiment, chart, options) pulled out of a proposed $1.6 billion purchase of TTN because of an unresolved corruption case.
The telecom concern with the big name is a hit in the options pits. TTN's Schaeffer's put/call open interest ratio (SOIR) checks in at 0.25, lower than 96 percent of the readings taken over the past 52 weeks. This is the lowest percentile ranking for TTN since the end of April, indicating the build-up of optimism toward the Olympian communications provider.
Analysts seem to agree with the assessment from the options crowd. According to Zacks, analysts feel TTN is worthy of four "strong buy" rankings and two "hold" rankings. Should this happy bunch change its mind, watch for a bit of a downside push for the company.
Is the optimism warranted? An initial technical glace would seem to indicate that it is, however; today's rally has pushed TTN face-to-face with the 21 level. As I write this article, TTN sits at 21.20, slightly above this resistance, but the battle isn't over. From September 2003 through February 2004, TTN enjoyed a span above 21, but could never garner enough strength to break above the 22 level and make a run at a new all-time high. While it may take an Olympian effort to break through this staunch resistance, TTN is not trembling on a brittle limb by itself by any means. Since August 2004 TTN has enjoyed the support of its 10-week and 20-week moving averages, which have acted as Pegasus, lifting TTN to its current perch.
Can TTN win its clash with resistance at the 21 level? It could be an epic struggle as TTN's Schaeffer's Equity Scorecard (available with a plethora of filter fun exclusively through Schaeffer's Gold) ranking checks in at a slightly bearish 4.0 out of 10.0
Research in Motion Limited (RIMM: sentiment, chart, options) is currently enjoying the three-day burst of strength from the telecom sector, fighting its way above the 75 level after gaining more than five points. This three-day push has put RIMM above the 75 level, but this has done nothing more than put the BlackBerry boys straight on a collision course with resistance at the 76 level. In March and April, this level turned away two advances by RIMM and sent it into a slump that it has spent the better part of May trying to break. Looking further back on RIMM's daily chart, it appears that we are in a near mirror of its late-January to mid-February run. While this run did enjoy some time above the 76 level, it worked its way back down and was forced lower. Before you think that I am a rampaging bear against RIMM, it should be noted that a recent bullish cross of its 20-day trendline suggests that its 10-day trendline may spurt the company on through the 76 level and on to a rally. To add further potential to a RIMM rally, its 10-week moving average is currently attempting a bullish cross of its 20-week trendline.
The inhabitants of the options pits are probably whipping out their RIMM-produced BlackBerry devices and shooting off some emails to each other about the shot of strength. The pits are filled to the brim with optimism toward RIMM. The firm's SOIR checks in at 0.81, which is higher than 92 percent of the readings taken over the past 52 weeks. Analysts are in a similar mindset as the options players. According to Zacks, RIMM receives 19 rankings, 18 of which are "hold" or better. This affords the chance that RIMM could see a downside (electric) slide, should this enthusiastic group change its mind.
While RIMM has been able to reverse its recent reverse run, it isn't enough to help its Equity Scorecard ranking of 4.0. This is on the bearish side of the spectrum, where 10.0 is the best (most bullish) grade a stock can receive.
Finally, we move to software developer, BEA Systems (BEAS: sentiment, chart, options) . Late yesterday, BEAS reported that its first-quarter earnings came in at eight cents per share, 35 percent higher than last year's first-quarter earnings of six cents per share. Excluding charges, BEAS would have earned nine cents per share, in line with the consensus estimate. The surprise came in the form of the company's revenue. Analysts expected the software concern to report revenue of $274.9 million, however, BEAS impressed by bringing in $281.7 million.
This news vaulted the firm higher on its daily chart, setting up a battle at the nine level. This level has acted as staunch resistance, turning BEAS away on several occasions since October. However, it does appear that BEAS's 10-week moving average could supply the strength to beat this resistance. From the middle of September to the end of December, this trendline allowed BEAS to make its latest test of the nine level. Yes, there is a recent bearish cross in BEAS's history, but strong earnings news has caused its 10-week trendline to make an upward turn. Further support could come from the software writer's 10-month trendline, which has similarly taken an upturn and appears poised to lend its support to BEAS's run. However, its 20-month moving average is quickly entering into the picture, currently inhabiting the 10 region.
Options players are betting that BEAS will rally, as calls outnumber puts nearly three-to-one in the front three months of options. The resulting SOIR of 0.34 is lower than 73 percent of the readings taken over the past 52 weeks. Analysts aren't as convinced of BEAS's chance to rally. According to Zacks, 15 of the 20 analysts covering the stock rate it a "hold." The other five break down as such: one "strong sell," one "sell," one "buy," and two "strong buys." This allows for a sizeable move one way or the other, should the 15 holdouts change their minds.
For details on how you can put sentiment studies to work for you, please visit Schaeffer's StreeTools Quotes & Tools Section.
Biocorrosion holohedral mnemonics flubdub index decern microresistor preparedness.
Problems catafalque vernacular heterostatic vesiculectomy roedeer usu.
Discuss this article:
Post your own comment
More articles:
Due to the diversity available to options traders, investors have many paths toward achieving a profit. For a bearish trader, the simplest path is to buy (to open) a put contract. By doing so, the trader is placing a bet that the underlying stock will trade significantly below the option's strike price by that contract's expiration date. This strategy is pretty straightforward, but it fails to take into account the potential complexities involved in positioning your portfolio to profit from stocks that are not in a clearly defined downtrend. What's more, due to the size of the drop needed in the underlying security, an outright put purchase often rules out stocks that have additional downside potential, but which could stall near technical support levels. read more...
McDonald's Corp (MCD: sentiment, chart, options) is in the news this morning as the company announced a 2.6% increase in January sales at restaurants open at least 13 months. Same-store sales in the closely watched U.S. region fell 0.7%, while those in Europe and in the Asia/Pacific, Middle East and Africa region both rose 4.3%. read more...
Bristol-Myers Squibb (BMY) read more...
Option traders are betting on a continued slump for casino concern Bally Technologies Inc. (BYI: sentiment, chart, options) , despite an upbeat analyst endorsement over the weekend. read more...
Aetna Inc. (AET) read more...
Research In Motion Limited (RIMM: sentiment, chart, options) has attracted an unusual amount of attention from option traders today – especially on the put side of the tape. In early afternoon activity, the BlackBerry maker has seen roughly 17,000 puts change hands, already surpassing the stock's expected single-session volume of about 15,000 puts. read more...
Earnings season is upon us, and investors all across Wall Street are hoping to take advantage of these potentially volatile few weeks. Large bull (and bear) gaps, upgrades and downgrades, and short squeezes all become increasingly more likely during this period, as companies meet, beat, or miss quarterly expectations. As such, it is imperative that traders be well equipped to deal with all of the eventualities. read more...
NRG Energy (NRG) read more...
Bullish call spreads are known by a variety of different names among options traders. But whether the position is a bull call spread, bullish debit spread, or a long vertical call spread, it is still constructed by purchasing an at-the-money or in-the-money call while simultaneously selling an out-of-the-money call. The reasoning behind pairing up these seemingly contradictory options is really quite simple: limited risk. read more...
McDonald's Corp. (MCD) read more...
Today's Most Popular Stories
working... 
