Schaeffer's Trading Floor Blog

Highs & Lows: Atmel, Eli Lilly, Exxon Mobil, and Intel

ATML, LLY, XOM and INTC were among the equities charting notable moves today

by 10/9/2012 1:27 PM
Stocks quoted in this article:

As Wall Street gears up for the start of third-quarter earnings season -- beginning after the close with Aloca Inc. (NYSE:AA) -- stocks are traveling noticeably south of breakeven this afternoon. Against this backdrop, the total number of stocks securing new annual highs is edging out those retreating to new lows. The NYSE tallies 83 annual peaks and 21 lows. Meanwhile, things are opposite on the Nasdaq, where there are 21 new highs and 40 bottoms. Among the names making notable runs today are Atmel Corporation (NASDAQ:ATML - 5.07), Eli Lilly & Co. (NYSE:LLY - 52.02), Exxon Mobil Corporation (NYSE:XOM - 92.72), and Intel Corporation (NASDAQ:INTC - 21.98).

  • Technically speaking, things haven't been going too well for ATML. Since the beginning of the year, the semiconductor issue has lopped off more than 37%, and has underperformed the broader S&P 500 Index (SPX) by 23 percentage points during the past 60 sessions. In fact, the stock peeled back to a two-year worst of $4.98 earlier today. Despite this weak price action, options traders appear to have an insatiable appetite for calls, as evidenced by ATML's 10-day call/put volume ratio of 204.26 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio lands six percentage points from an annual peak, implying that traders on these exchanges have rarely purchased calls over puts at a faster clip during the past year. However, there could be a less-than-bullish reason for this call-heavy activity. Short interest jumped 9.9% during the past month. With buy-to-open call volume and short interest rising in tandem, it's possible that short sellers are picking up optimistic options simply to hedge their pessimistic positions.

  • LLY reached the $53.55 mark this morning -- its loftiest price since January 2008 -- after being greeted with several upbeat brokerage notes. Specifically, MKM lifted its price target to $49 from $44; USB upped its target by $4 to $49; Barclays raised its target to $46 from $39; and Credit Suisse hoisted its price target by $5 to $59. Also, Goldman Sachs weighed in with a target hike to $54 from $42, and an upgrade to "neutral" from "sell," removing the pharmaceuticals company from its sell list for the first time in three years. In light of today's action, LLY's recent upbeat Alzheimer's drug data, and its 25% year-to-date return, the mostly skeptical analyst crowd could reconsider their positions. Of the 17 brokerages following the stock, 70.6% have doled out "hold" or worse suggestions. Moreover, the average 12-month price target sits at $45.65, which is a $7.90 discount to today's multi-year peak.

  • Moving on … oil and gas giant XOM rallied to a four-year acme of $93.36 today, adding to its healthy 9.3% rise in 2012. Looking at the sentiment picture, the Dow component has grabbed some pessimistic attention from the options pits, which could translate into a contrarian boon. During the past 50 days, speculators on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 0.87 puts for every 100 calls. This ratio arrives in the 81st percentile of its annual range, signaling that the current preference for puts is higher than usual. Meanwhile, XOM's 10-day put/call volume ratio of 1.71 arrives just one percentage point from an annual high.

  • Finally, fellow Dow heavyweight INTC was hit with a wrath of downbeat analyst attention this morning; thus, pulling the stock to a 52-week bottom of $21.86. From a longer-term perspective, INTC is off more than 9% this year, and has been lagging the SPX by nearly 19 percentage points during the past two months. And things could get worse, should the brokerage bunch continue to surround the tech giant with negativity. There are 14 "strong buys" and one "buy," compared to 23 tepid "holds," one "sell," and one "strong sell" recommendation. Plus, the consensus 12-month price target of $26.07, represents a 19.3% premium to INTC's fresh low.

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