Schaeffer's Trading Floor Blog

Highs & Lows: Visa, Krispy Kreme, and Travelzoo

V and KKD marched to new highs, while TZOO dropped to a new annual lo

by 11/20/2012 1:55 PM
Stocks quoted in this article:

After Fed Chairman Ben Bernanke pleaded with Washington to address the fiscal cliff -- saying that inaction has already impacted the economy -- the markets are swimming in the red. Nevertheless, the number of NYSE-listed stocks reaching new tops is eclipsing those at new lows, with 65 new highs and 28 bottoms. Meanwhile, the Nasdaq has seen 20 peaks and 39 new nadirs. Among the equities charting notable moves are Visa Inc (NYSE:V 145.74), Krispy Kreme Doughnuts (NYSE:KKD - 9.23), and Travelzoo Inc. (NASDAQ:TZOO - 17.02).

  • Credit card namesake V charged to an all-time best of $147.38 today, amplifying its already impressive technical run. The shares have outpaced the S&P 500 Index (SPX) by nearly 16 percentage points during the past 60 sessions, and have enjoyed a notable 43.5% return in 2012. But this overall uptrend has been ignored in the options pits. The stock's 10-day put/call volume ratio of 1.71 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) lands four percentage points from an annual high, implying that traders on these exchanges have rarely purchased puts over calls at a faster clip during the past year. What's more, the Schaeffer's put/call open interest ratio (SOIR) checks in at 1.34, confirming that puts outnumber calls among options expiring within three months.

  • Mmmm doughnuts This morning, KKD unveiled a consensus-topping third-quarter profit, and lifted its outlook for full-year adjusted earnings. As result, investors boosted the stock some 25% to the $9.44 mark -- its loftiest price since August 2011. Should the shares continue to rise, KKD could score some price-target hikes. The average 12-month price target sits at $9.75, which represents a slim premium to today's 15-month high. Elsewhere, short sellers appear to be reducing their bearish positions. Over the past month, short interest slipped 2.9%, and now accounts for 5.9% of the security's float. However, at the security's average pace of trading, it would take nearly six days to buy back all of these shorted shares, which could translate into a contrarian tailwind for KKD.

  • TZOO's technical picture looks a bit hairy, as the Internet travel site has ripped back roughly 28% since January, and has fallen behind the SPX by 21 percentage points over the past two months. What's worse, the shares notched a more than two-year bottom of $16.83 earlier today. Against this backdrop, there seems to be plenty of negativity priced into the shares. The 10-day put/call volume ratio of 1.4 on the ISE, CBOE, and PHLX ranks in the 96th percentile of its annual range, signaling that traders on these exchanges have seldom made bearish bets over bullish at a faster pace during the past year. To boot, the security's 20-day put/call volume ratio arrives at 2.0.

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