Schaeffer's Trading Floor Blog

Highs & Lows: Intel, Molycorp, and Universal Health Services

INTC and MCP drifted to new annual lows, while UHS achieved a new high

by 11/7/2012 1:20 PM
Stocks quoted in this article:

U.S. stocks are taking a thrashing today, as Wall Street weighs the prospects of another four years for President Obama and the looming "fiscal cliff." Consequently, the number of new lows is outpacing the new highs being tagged. So far today, there have been 39 new peaks and 67 new bottoms on the NYSE, while the Nasdaq has seen 17 new highs and 82 new lows. Among the stocks reaching new highs are Intel Corporation (NASDAQ:INTC - 21.01), Molycorp Inc (NYSE:MCP - 8.96), and Universal Health Services, Inc. (NYSE:UHS - 45.74).

  • The tech sector has taken a big hit in today's broad-market pullback, with semiconductor giant INTC faltering some 3% just after lunchtime. With this, the stock has exacerbated its technical dilemma, retreating to a 13-month worst of $20.90 and bringing its year-to-date loss to 13.4%. Things aren't any better from a relative-strength perspective, as the shares have lagged the S&P 500 Index (SPX) by 20 percentage points during the past three months. Even INTC's sentiment backdrop echoes this weak price action. Twenty-six of the 38 analysts following the equity maintain a "hold" or worse rating. Meanwhile, short-term option players are bearishly aligned as well. The Schaeffer's put/call open interest ratio (SOIR) of 1.11 indicates puts edge out calls among options expiring within the next three months. Plus, this ratio is higher than 93% of the past year's readings.

  • As the bears tighten their grip on the Street, rare-earths mining outfit MCP continues to nosedive on the charts. Just moments ago, the stock buckled to an all-time nadir of $8.86, deepening its 62.7% year-to-date deficit. Elsewhere, the brokerage crowd seems to be in the dark about MCP's overall downtrend, as half of the six analysts covering the security have doled out "buy" or better endorsements. What's more, the average 12-month price target of $16.71 represents an 88.6% premium to today's record low.

  • On a high note, UHS and other healthcare facility operators are benefitting from the election outcome and possibilities of what "Obamacare" will mean for business. Shares of UHS reached a new 14-month peak of $46.93 earlier today and could add to their year-to-date gain of 17.9%, should opportunistic options players continue to buy into this upswing. During the past 50 days, traders on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 44.88 calls for every put on the stock. This ratio arrives in the 93rd percentile of its annual range, signaling that speculators have rarely scooped up more bullish bets over bearish recently. However, short interest on the equity advanced 12.3% during the past month, suggesting the recent acceleration in call buying could be related to hedging activity by the shorts.

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