Schaeffer's Trading Floor Blog

Highs & Lows: Affymax, Costco, Marvell, and XL Group

AFFY, COST, MRVL, and XL were among the equities charting notable moves today

by 10/10/2012 5:02 PM
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The market churned slowly lower today, finishing just shy of its intraday low. Against this backdrop, the number of stocks that tagged new annual highs today was narrowly surmounted by those falling to new lows. The NYSE counted 40 annual peaks and 33 lows. Meanwhile, things were more bleak on the Nasdaq, where there were 34 new highs and 50 bottoms. Among the names making notable runs today were Affymax, Inc. (NASDAQ:AFFY - 26.12), Costco Wholesale Corporation (NASDAQ:COST - 101.56), Marvell Technology Group Ltd. (NASDAQ:MRVL - 8.82), and XL Group plc (NYSE:XL - 25.05).

  • On the heels of yesterday's price-target hike by Lazard ($28 from $20), AFFY prolonged its extraordinary 295% year-to-date upswing, tagging a two-year acme of $26.85 earlier today. On a relative-strength basis, the biopharmaceuticals outfit has outperformed the broader S&P 500 Index (SPX) by more than 41 percentage points during the past two months. Consequently, the stock's Relative Strength Index (RSI) now resides at 78, teetering into overbought territory. This suggests that AFFY may be due for a bit of a breather in the near future.

  • Next up COST found itself at an all-time best of $104.43 today, thanks to a better-than-expected fiscal fourth-quarter report. On the charts, the shares have collected a 21.9% return in 2012, but the options crowd is less than enthusiastic about this uptrend. The security's 10-day put/call volume ratio of 1.40 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 90th percentile of its annual range, signaling that traders on these exchanges have rarely made bearish bets over bullish at a faster pace during the past year. Plus, COST's Schaeffer's put/call open interest ratio (SOIR) of 1.93 sits at an annual peak, suggesting near-term options players have never been more put-heavy throughout the last 12 months.

  • MRVL was slapped with a pair of negative brokerage notes this morning, as Deutsche Bank cut its price target to $12 from $15, and Barclays dropped its target by $4 to $10. As a result, the semiconductor issue exacerbated its 36% year-to-date deficit, when the stock peeled back to the $8.79 level -- its worst price since March 2009. Should MRVL's technical predicament deteriorate even further, there could be additional bearish notes to follow. The consensus 12-month price target of $13.27 represents a 51% premium to today's new low. What's more, 24 analysts covering the equity appear conflicted. There are 10 "strong buys" and two "buys," versus 12 lukewarm "holds," and zero "sells."

  • Finally, global insurance provider XL notched an 18-month high of $25.10 today, strengthening its already solid 26.7% rise in 2012. From a shorter-term perspective, the shares have outpaced the SPX by 13 percentage points over the past 60 sessions. Considering this positive price action, it should come as no surprise to see such an overwhelming appetite for bullish bets in the options pits, as evidenced by the stock's 10-day call/put volume ratio of 33.25 on the ISE, CBOE, and PHLX. On the other hand, this activity may not so upbeat after all. Short interest on the equity jumped 17.1% 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 to hedge their pessimistic positions.

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