Option Skews - Relatively Heavy Put Activity on Fuqi International Inc and Cypress Semiconductor Corp

Here are the stocks that saw a bias toward put activity in the previous session. This filtered scan is based on the International Securities Exchange (ISE) buy-to-open data. It looks for stocks where the previous day's put volume on the ISE is at least twice as great as the call volume. It then sorts the stocks based on the put volume. Since this is buy-to-open data, this can be a good source for finding stocks where skepticism is emerging. Of particular interest to me would be situations where we see put activity on stocks that are still in intermediate-term uptrends. This would be a potentially encouraging sign from the contrarian perspective.

Companies included in today's scan results: SPDR Trust Series I (SPY), American International Group Inc (AIG), IBM (IBM), CIENA Corp. (CIEN), Express Scripts (ESRX), Peabody Energy (BTU), Alpha Natural Resources, Inc. (ANR), Aeropostale Inc (ARO), Fuqi International Inc (FUQI), Cypress Semiconductor Corp (CY), Frontline. (FRO), Gap (GPS), Saks Incorporated (SKS), AngloGold Ashanti. (AU), American Express (AXP), PDL BioPharma (PDLI), Massey Energy (MEE), American Axle & Manufact. Holdings Inc (AXL), Whole Foods Market (WFMI), Lincare (LNCR), Cadence Design Systems (CDNS), Philip Morris International Inc (PM), Johnson & Johnson (JNJ), ITT Educational Services (ESI), Baker Hughes Incorporated (BHI).

Fuqi International Inc and Cypress Semiconductor Corp are the charts that stood out to me -

• As the weekly chart shows, Fuqi International has given traders a wild ride this year. The shares surged from their March lows near 4 to more than 32 by September and then staged a pullback that has stabilized near 20. While the current selloff looks extreme, I think it has to be taken in the context of the rally. In other words, big rallies can be followed by big pullbacks. I don't really see much in the way of obvious support nearby but that isn't uncommon in this sort of breakout/momentum situation. The daily Relative Strength Index (RSI) recently hit an oversold reading and the weekly measure has worked off the overbought condition so I would be looking for signs that buyers were starting to return. A warning sign though would be a break of the recent lows.
• The daily chart of Cypress Semiconductor is showing some potential signs of life. The equity recently pulled back to support near 8 and hit an oversold condition. Buyers then stepped in and bounced the shares. The pop has pushed the stock to a short-term overbought condition and leaves it at the upper end of the downtrending channel in place off the July peak. The action here will give a good clue as to whether this was just an oversold bounce or a return of sustained buying demand.

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