Schaeffer's Trading Floor Blog

Highs & Lows: Bank of America, Rite Aid, and Renren

BAC leapt to a fresh high, while RAD and RENN slipped to new lows

by 12/5/2012 1:59 PM
Stocks quoted in this article:

Markets are mixed in afternoon trading -- the Dow is working on a triple-point lead, while the Nasdaq is off by roughly 0.4% -- as Wall Street sifts through a bout of encouraging economic data and downbeat activity from tech giant Apple Inc. (NASDAQ:AAPL). Consequently, the number of equities reaching new highs is edging out those at lows. On the NYSE, there are 56 new peaks and 18 bottoms, while there are 36 tops and 25 fresh lows over on the Nasdaq. Among the stocks charting notable moves are Bank of America Corp (NYSE:BAC - 10.37), Rite Aid Corporation (NYSE:RAD - 0.98), and Renren Inc (NYSE:RENN - 3.13).

  • First up banking giant BAC has been quite an overachiever on the charts, soaring 87% in 2012, and outpacing the broader S&P 500 Index (SPX) by more than 15 percentage points during the past 60 sessions. Elsewhere on the Street, this overall uptrend has been mostly ignored by the brokerage bunch, which maintains nine "buy" or better endorsements versus 16 "hold" or worse recommendations. What's more, the average 12-month price target of $10.20 is a discount to BAC's 17-month peak of $10.47, tagged just moments ago.

  • Meanwhile, drugstore operator RAD has taken an opposite path, lagging the SPX by roughly 20 percentage points over the past three months, and ripping off more than 22% year-to-date. In fact, the security has been traveling in penny-stock territory since mid-November. Exacerbating this predicament even further, RAD slipped to the $0.97 mark earlier today -- its lowest price since October 2010. This new nadir represents a 79% discount to the consensus 12-month price target of $1.74, which the shares haven't touched in eight months. Plus, short players could be tightening their bearish grip. Short interest inched 1.1% higher over the most recent reporting period, and now accounts for 5.1% of RAD's float. At the equity's average pace of trading, it would take nearly one week to buy back all of these pessimistic positions.

  • RENN pulled back to an all-time worst of $3 this morning, on the heels of yesterday's lukewarm ratings adjustment, and a Securities and Exchange Commission (SEC) inquiry into activity at China-based offices of the world's top five accounting firms. Taking a look at the sentiment backdrop, the Chinese social networking site currently tallies one "strong buy" recommendation, seven tepid "holds," and two "strong sells." Elsewhere, there's a more optimistic attitude in the options pits, as evidenced by the stock's 10-day call/put volume ratio of 89.00, and its 20-day ratio of 32.90 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). However, short interest currently accounts for a healthy 4% of RENN's available float, hinting at potential hedging activity by short sellers.

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