Schaeffer's Trading Floor Blog

Highs & Lows: Southwest Airlines, Krispy Kreme, and Toyota Motor

LUV, KKD, and TM leapt to annual peaks

by 1/4/2013 1:59 PM
Stocks quoted in this article:

The bulls are in control on Wall Street this afternoon, despite this morning's mixed-bag of economic reports. Against this backdrop, the number of equities at new highs is easily surpassing those at new lows. At last check, the NYSE has racked up 224 peaks and just a pair of bottoms. Meanwhile the Nasdaq has seen 91 tops and only three lows, including a guidance-related multi-year worst of $25 for Endo Health Solutions Inc (NASDAQ:ENDP). Among the names charting notable moves are Southwest Airlines Co. (NYSE:LUV - 10.87), Krispy Kreme Doughnuts (NYSE:KKD - 11.04), and Toyota Motor Corporation (ADR) (NYSE:TM - 96.90).

  • LUV is flying higher in today's broad-market rally, notching an 18-month best of $10.92 earlier in the session. The stock's technical picture remains strong, as LUV has tacked on more than 25% over the past 12 months, and has outpaced the S&P 500 Index (SPX) by nearly 20 percentage points throughout the past three months. Despite this overall performance, the options space is loaded with skepticism. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) reveals a 50-day put/call volume ratio of 5.68, which shows that 568 puts have been bought to open for every 100 calls during the past two weeks. This ratio lands at an annual high, meaning speculators on these exchanges haven't initiated bearish bets over bullish at a faster clip during the past year.

  • Longbow Research started coverage on KKD with a "buy" endorsement and a $15 price target, believing the doughnuts pro will see rising revenue and earnings due to its new production and distribution methods. Investors applauded today's note and hoisted the shares up some 9%, lifting their year-over-year return to 72%. While KKD already boasts five "buys" out of six total ratings, there could be price-target hikes on the horizon, especially if the security continues to exceed analysts' expectations. The average 12-month price target currently sits at $10.92, which is a discount to KKD's more than five-year peak of $11.18, tagged this morning.

  • Just moments ago, Japanese automaker TM jumped to the $97 level -- its loftiest price since June 2008. The stock is enjoying a solid uptrend on the charts, rising roughly 42% in the past 52 weeks, and outperforming the broader SPX by 23 percentage points during the last 60 trading days. As a result of this upswing, however, the security's Relative Strength Index (RSI) resides at 72 -- in overbought territory -- which suggests TM may be due for a bit a of a breather soon.

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