Schaeffer's Trading Floor Blog

Highs & Lows: Sirius XM Radio, Citigroup, and ARM Holdings

SIRI, C, and ARMH rallied to annual peaks

by 1/9/2013 12:46 PM
Stocks quoted in this article:

The bulls are in the driver's seat this afternoon, as a wave of moderate buying is underway on Wall Street, thanks to a positive start to fourth-quarter earnings season. In light of today's broad-market uptrend, the number of equities at new highs is overshadowing those suffering new lows. At last look, the NYSE has seen 243 annual highs and just four annual lows, including a guidance-inspired 11-year worst for ITT Educational Services, Inc. (NYSE:ESI). Over on the Nasdaq, meanwhile, there have been 113 annual highs and only a pair of annual lows. Among the names charting notable moves higher are Sirius XM Radio Inc (NASDAQ:SIRI - 3.14), Citigroup Inc. (NYSE:C - 42.57), and ARM Holdings plc (ADR) (NASDAQ:ARMH - 39.88).

  • SIRI launched to the $3.16 level this morning, notching its best price since March 2008. This move only underscores the stock's technical strength, as SIRI boasts a 54% 52-week return and a roughly 9% year-to-date gain. On a relative-strength basis, the shares have outperformed the broader S&P 500 Index (SPX) by over 12 percentage points during the past three months. As a result of this overall upswing, though, SIRI's Relative Strength Index (RSI) is sitting at 73 -- in overbought territory -- which suggests the Internet and satellite radio issue may be due for a bit a of a breather soon. Currently, SIRI is wavering around the breakeven mark.

  • Since C agreed on Monday to pay for its part in a multi-billion dollar settlement to assist consumers affected by shoddy loans and foreclosure practices, the banking firm has been climbing higher and higher on the charts. Since January, the shares have enjoyed an impressive 42% rise. And earlier today, C got another boost -- tagging a 20-month peak of $43.25 -- on a trio of price-target hikes from Credit Suisse, Guggenheim, and RBC. Even the options crowd has taken notice of the stock's bullish price action, as traders on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 3.36 calls for every put on the security during the past 10 days. This ratio arrives at an annual high, meaning speculators on these exchanges have never made more bullish bets over bearish throughout the past year. But short interest swelled 77.5% over the past month, suggesting the recent rise in call buying could be due to hedging activity by the shorts. But the bearish bandwagon is far from crowded, as it would less than two days to buy back all of these pessimistic positions, at the equity's average daily volume.

  • Semiconductor concern ARMH has not only outperformed the SPX by 39 percentage points during the past 60 sessions, but it has rocketed more than 40% in 52 weeks' time. But this strong technical presence has done little to dampen the bearish sentiment in the options pits. ARMH's 10-day ISE, CBOE, and PHLX put/call volume ratio arrives at 3.10, indicating traders have bought to open more than three puts for every call over the past couple of weeks. This ratio is 14 percentage points away from an annual acme, which signifies a stronger-than-usual penchant for bullish options over bearish. Elsewhere on the Street, analysts have yet to fully appreciate the security's overall uptrend. The consensus 12-month price target of $36.47 is a sizable discount to ARMH's more than 12-year high $39.95, tagged just moments ago.

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