Schaeffer's Trading Floor Blog

Highs & Lows: Advanced Micro Devices, McDonald's, and AMC Networks

AMD and MCD dropped to new annual lows, while AMCX marched to a new high

by 11/8/2012 1:09 PM
Stocks quoted in this article:

Although investors were greeted with upbeat jobless claims data and a narrowing of the U.S. trade deficit this morning, the bulls have yet to return to Wall Street. Against this backdrop, today's lackluster broad-market activity has translated into a larger number of stocks at new lows, compared to those at new highs. At last check, there have been 38 new peaks and 54 new bottoms on the NYSE, while the Nasdaq has seen 25 new highs and 64 new lows. Among the stocks charting notable moves are Advanced Micro Devices, Inc. (NYSE:AMD 1.99), McDonald's Corporation (NYSE:MCD - 85.51), and AMC Networks Inc (NASDAQ:AMCX - 53.38).

  • Technically speaking, global semiconductor outfit AMD has been quite the laggard, burning off almost 63% in 2012 and underperforming the S&P 500 Index (SPX) by a whopping 52 percentage points during the last three months. In late-morning action, the shares exacerbated their overall downtrend and dipped to a more than three-year nadir of $1.96. Despite this flogging, the options pits appear uncharacteristically upbeat, as evidenced by the stock's 10-day call/put volume ratio of 4.52 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). However, short sellers could be accountable for some of the call buying of late, picking up optimistic options to hedge their pessimistic positions. Short interest on the equity ballooned 17.9% during the most recent reporting period, and now makes up 22.6% of the AMD's available float.

  • Global same-store sales for burger giant MCD dropped for the first time since March 2003, which prompted a sell-off in its shares. The Dow component backpedaled to the $84.97 mark -- its worst price since October 2011 -- worsening its 14.8% year-to-date deficit. There could be deeper valleys ahead for the security, should the brokerage crowd think twice about its current stance. There are 14 "buy" or better endorsements, versus 10 tepid "holds," and not a single "sell." Furthermore, the average 12-month price target sits at $97.05, which is a 14% premium to today's fresh low.

  • Wildly popular television series The Walking Dead is credited for AMCX's third-quarter results, which came in stronger than expected despite a dispute with Dish Network (NASDAQ:DISH) that negatively impacted cash flow. The cable network company is subsequently enjoying a sizeable upswing today, leaping to an all-time best in the process. Should AMCX extend its 39.7% year-to-date climb, short sellers could continue to hit the exits. Short interest deflated 16.8% during the past two reporting periods, and at the equity's average pace of trading, it would take more than four sessions to buy back all of these pessimistic positions. AMCX could net an additional boost, should the bearish analysts have a change of heart. Six of the 11 brokerages following the stock have doled out "hold" or worse ratings, while the consensus 12-month price target of $47.13 is a more than $8 discount to today's record peak of $55.38.

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