Schaeffer's Trading Floor Blog

Highs & Lows: Adobe Systems, Kellogg, and Dr Pepper Snapple Group

ADBE, K, and DPS popped to fresh highs

by 12/10/2012 1:58 PM
Stocks quoted in this article:

U.S. stock markets are holding onto their lead going into the last few hours of trading, as investors contemplate fiscal-cliff uncertainties and euro-zone political anxieties. While the bulls maintain control, there are more equities at new highs than those suffering new lows. At last check, there are 71 new peaks and 19 bottoms on the NYSE. Meanwhile, the Nasdaq counts 34 tops and 21 fresh lows, including an all-time worst of $1.86 for Eagle Bulk Shipping Inc. (NASDAQ:EGLE). Among the stocks charting notable moves are Adobe Systems Incorporated (NASDAQ:ADBE - 35.64), Kellogg Company (NYSE:K - 56.12), and Dr Pepper Snapple Group Inc. (NYSE:DPS - 45.78).

  • Amplifying its 26% year-to-date increase, technical standout ADBE rallied to the $35.76 mark today -- its loftiest price since May 2011. Considering this overall uptrend, options players are optimistically slanted toward the software giant. During the past 10 days, traders on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 1.55 calls for every put on the stock. This ratio arrives in the 62nd percentile of its annual range, signaling that speculators have scooped up bullish bets over bearish at an accelerated clip recently. It's possible, however, that a portion of the recent call volume is a result of hedging activity by the shorts, as short interest ballooned 20.1% over the past two reporting periods. At ADBE's average pace of trading, it would take one week to buy back all of these shorted shares.

  • Packaged foods producer K has fared pretty well on the charts this year, rising 10.9% since January, and outperforming the S&P 500 Index (SPX) by 12.5 percentage points during the past three months. But this positive price action hasn't done much to convince bearish analysts otherwise, as 85% of the 19 brokerages covering the stock have doled out "hold" or worse suggestions. Furthermore, the average 12-month price target of $55.94 is a discount to K's 18-month peak of $56.50, tagged in morning action.

  • Soft-drinks brand business DPS enjoyed a more than 1% boost to an all-time best of $46.06 this morning, adding to its solid 15.8% 2012 return. Although DPS appears to have proven itself on the charts, negative sentiment runs rampant against the shares. The stock's 10-day put/call volume ratio of 10.00 on the ISE, CBOE, and PHLX ranks four percentage points away from an annual high, suggesting traders on these exchanges have rarely made bearish bets over bullish at a faster pace during the past year. Elsewhere on the Street, seven out of 11 analysts following DPS consider it a "hold" or worse rating.

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