Schaeffer's Trading Floor Blog

Highs & Lows: Groupon, Intel, and Gilead Sciences

GRPN and INTC dropped to new annual lows, while GILD marched to a new high

by 11/12/2012 12:57 PM
Stocks quoted in this article:

Major market indexes are pointed south this afternoon, as investors can't seem to shake their "fiscal-cliff" concerns. While today's sell-off could be limited due to the observance of Veteran's Day, the number of equities drifting to new bottoms is eclipsing those at new highs. At last look, the NYSE has tallied 65 new lows and 46 new peaks, while the Nasdaq counts 67 bottoms and just 15 new highs. Among the stocks charting notable moves are Groupon Inc (NASDAQ:GRPN - 2.66), Intel Corporation (NASDAQ:INTC - 20.72), and Gilead Sciences, Inc. (NASDAQ:GILD - 72.77).

  • Discount gift-certificates business GRPN is in serious technical peril, lopping off 87.1% in 2012, and lagging the broader S&P 500 Index (SPX) by more than 47 percentage points throughout the past three months. To make matters worse, the stock was downgraded to "market perform" from "outperform" at William Blair this morning, which spawned a record low of $2.60 for the shares. Even though GRPN is under such duress, the options pits appear to be unusually upbeat. During the past 10 days, speculators on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 9.41 calls for every put. This ratio lands two 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, short sellers could be responsible for some of the recent call buying, employing these bullish contracts to hedge their pessimistic positions. Short interest now makes up more 14.3% of the security's available float.

  • Dow heavyweight INTC was knocked to the $20.65 level today -- its lowest point since last October. The tech giant's 14.5% year-to-date deficit could worsen, should the remaining bullish brokerage holdouts reconsider their current views. The consensus 12-month price target sits at $23.88, which is a 15.6% premium to today's new nadir. Meanwhile, 12 out 38 analysts still maintain "buy" or better endorsements for INTC.

  • Finally GILD rocketed to an all-time best of $73.25, thanks to positive data from its mid-stage hepatitis C study. Using a cocktail of its drugs, the biotech firm saw a 100% cure rate in a small number of patients with the most common form of the disease. On the charts, the shares have tacked on almost 78% year-to-date, and have outpaced the SPX by 14 percentage points during the past 60 sessions. Looking at the sentiment backdrop, it seems that relatively few traders are betting on GILD to decline anytime soon. Although short interest jumped 16.3% over the past month, these shorted shares now make up just 4% of the equity's float, representing a rather meager supply of sideline cash.

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