Schaeffer's Trading Floor Blog

Highs & Lows: Ariad Pharmaceuticals, IBM, LDK Solar, and Visa

ARIA, IBM, LDK, and V were among the equities charting notable moves today

by 10/1/2012 12:52 PM
Stocks quoted in this article:

Stocks shot higher in midday trading, attempting to reclaim some of last week's downturn on the heels of an upbeat reading from the ISM manufacturing index. Mirroring this bullish sentiment, the number of equities springing to new annual highs is easily surpassing those that have buckled to fresh lows. On the NYSE, there are 193 securities at annual peaks, versus just six lows. Things are pretty much the same over on the Nasdaq, where there are 98 annual highs and 17(space)nadirs. Among the names making notable runs today are Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA - 23.88), International Business Machines Corp. (NYSE:IBM - 211.07), LDK Solar Co., Ltd (ADR) (NYSE:LDK - 1.10), and Visa Inc (NYSE:V - 136.88).

  • This morning, Biotech firm ARIA said that a small trial of its experimental cancer drug, AP26113, shrank tumors in eight out of 11 lung cancer patients. This news was made even sweeter as the stock was also greeted with three bullish brokerage notes. Specifically, BMO lifted its price target to $36 from $31; Stifel upped its price target to $25 from $24; and Brean Murray boosted its target by $16 to $35. The shares have rocketed more than 95.5% in 2012, and could trek even higher, should analysts' continued to be pleased by the equity's performance both on and off the charts. In fact, the consensus 12-month price target sits at $24.75, which is a discount to ARIA's new 12-year best of $25.14, tagged in early trading.

  • Dow heavyweight IBM announced that it has completed its acquisition of Texas Memory Systems -- a flash-memory solutions developer -- though no financial terms were disclosed. With that, the tech giant jumped to a new all-time best of $211.67, inflating its healthy 14.8% year-to-date gain. Looking at the sentiment picture, options players seem to have turned their attention away from IBM's upward momentum. During the course of the past 10 days, speculators at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 1.46 puts for every call. This volume ratio ranks higher than 94% of other such annual readings, suggesting bearish bets have been scooped up over bullish at a near-high clip in the past couple of weeks.

  • Moving in the opposite direction, alternative energy issue LDK took a step closer toward penny-stock territory, slipping to a record low of $1.05. Since the beginning of the year, the security has peeled back some 74%, and has lagged the broader S&P 500 Index (SPX) by nearly 50 percentage points throughout the past 60 sessions. The shares' technical predicament could get even worse, should the skeptics maintain their current dispositions. Even though short interest dipped 9.5% over the past two reporting periods, it still makes up 15.1% of LDK's available float. In fact, it would take more than 12 days to repurchase all of these bearish bets. Moreover, the stock's Schaeffer's put/call open interest ratio (SOIR) arrives at 5.19, signaling that puts outnumber calls more than five to one among options expiring within three months. This ratio registers in the 98th percentile of its annual range, suggesting that near-term options players have rarely been more put-heavy toward LDK during the last year.

  • Finally, running to its own all-time perch of $137.90, credit card concern V has prolonged its notable year-to-date rise of almost 35%. Considering this strong price action, it's not at all surprising to see such an accumulation of optimism in the options pits. V's 10-day call/put volume ratio of 4.05 on the ISE, CBOE, and PHLX arrives in the 92nd percentile of its annual range, signaling that traders on these exchanges have seldom made bullish bets over bearish at a faster pace during the past year.

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