Schaeffer's Trading Floor Blog

Highs & Lows: Discover, General Electric, Walgreen, and Watson Pharmaceuticals

ADTN, DFS, GE, WAG, and WPI were among the equities charting notable moves today

by 9/28/2012 2:36 PM
Stocks quoted in this article:

Wall Street is painted in red ink this afternoon, thanks to lackluster economic data earlier in the session. Although the broader equities market is headed south, the number of equities securing new annual highs is overshadowing those at fresh lows. Currently, there are 104 securities at annual peaks, compared to six lows on the NYSE. Meanwhile, things are a little closer on the Nasdaq, where there are 38 annual highs and 13 nadirs -- including an earnings-related retreat to multi-year lows for ADTRAN, Inc. (NASDAQ:ADTN - 17.30). Among the names making notable runs today are Discover Financial Services (NYSE:DFS - 40.10), General Electric Company (NYSE:GE - 22.75), Walgreen Company (NYSE:WAG - 36.29), and Watson Pharmaceuticals (NYSE:WPI - 85.21).

  • FBR upped its price target on DFS to $44 from $39 this morning, and the stock shot to a new all-time best of $40.28. The stock's time on the charts has been nothing short of impressive, with the shares adding more than 66% in 2012. DFS' steady rise has caught the eye of short-term option traders. In fact, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.51 not only shows that call open interest doubles put open interest among options with a three-month shelf life, but also ranks in the 11th percentile of its annual range. In other words, near-term traders are more call-heavy than usual toward the stock.

  • Dow component GE recorded its loftiest level since October 2008 today, with bullish brokerage nods from Barclays and Nomura pushing the stock to $22.96. Today's price action is reflective of GE's longer-term technical durability, with the equity adding more than 43% on a year-over-year basis. Option players have certainly taken notice of GE's upward momentum. During the course of the past 50 sessions, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 2.74 calls for every put. Plus, this ratio ranks higher than 81% of other such annual readings, suggesting bullish bets have been scooped up over bearish at a faster-than-usual pace in recent months.

  • Despite this morning's unimpressive turn in the earnings confessional, WAG tagged a new annual high of $36.90 in early trading. The equity has since surrendered its earlier gains, and was last seen roughly 1% lower. On a year-to-date basis, WAG has added a respectable 10%, but analysts remain decidedly pessimistic toward the pharmacy stock. No fewer than 11 out of 19 analysts maintain a "hold" or "sell" suggestion toward the equity, while the consensus 12-month price target of $38.78 is just a stone's throw from WAG's current perch.

  • Finally, WPI added to its 38.7% year-to-date return, and rallied to the $86.07 mark earlier today -- marking a new record peak for the pharmaceutical concern. Short interest on the equity has been on the decline recently, as skeptics abandon ship in the wake of WPI's uptrend. Short interest has dropped 9.2% over the past month, now makes up 2.2% of WPI's available float, which points to a rather meager supply of sideline cash.

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