Schaeffer's Trading Floor Blog

Highs & Lows: Yahoo!, Rackspace, and Southwest Airlines

YHOO, RAX, and LUV climbed to new peak

by 12/17/2012 1:38 PM
Stocks quoted in this article:

U.S. markets are maintaining their early gains stemming from upbeat sentiment surrounding the budget talks in Washington, D.C. Against this backdrop, the number of equities at new highs is easily overshadowing those at new lows. On the NYSE there are currently 71 peaks and 18 bottoms, while the Nasdaq tallies 41 tops and 19 lows -- including a second consecutive session of new lows for Finish Line Inc (NASDAQ:FINL - 17.71). Among the stocks charting notable moves are Yahoo! Inc. (NASDAQ:YHOO - 19.59), Rackspace Hosting, Inc. (NYSE:RAX 69.02), and Southwest Airlines Co. (NYSE:LUV - 10.38).

  • YHOO this morning leapt to $19.74 -- its loftiest price since August 2008. Technically speaking, the shares have been steadily on the rise in 2012, adding more than 21% year-to-date, and outpacing the broader S&P 500 Index (SPX) by 28 percentage points during the past 60 trading days. However, YHOO's Relative Strength Index (RSI) now rests at an elevated 76, which is in overbought territory. This setup suggests that the Internet issue could endure a pullback sometime in the near future. In fact, since tagging its multi-year acme, YHOO has burned off about 0.3%.

  • Cloud computing services provider RAX scored an all-time best of $70.37 earlier today, prolonging its rather impressive 60% rise since January, which has been supported by its 10-month and 20-month moving averages. Despite this overall uptrend on the charts, sentiment for RAX remains notably skeptical. The consensus 12-month price target of $71.33 is a near $1 discount to today's record high. Meanwhile, eight out of 17 analysts consider the equity a lukewarm "hold."

  • LUV enjoyed a boost to a 17-month peak of $10.43. At last check, this upward momentum appears to be firmly intact, as the shares are up 1.8%, pushing their year-to-date return over 21%. And it seems that options bulls are trying to capitalize on this positive price action, as the stock's 10-day call/put volume ratio of 11.90 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 94th annual percentile -- just six percentage points from an annual optimistic peak.

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