Schaeffer's Trading Floor Blog

New Annual Highs: Merck, Quest Diagnostics, and Texas Industries

MRK, DGX, and TXI found fresh peaks in today's session

by 7/12/2012 2:20 PM
Stocks quoted in this article:

Although trimming earlier losses, the major market indexes are still churning below breakeven as global economic data continues to send investors mixed signals. Not surprisingly, there is no clear rhyme or reason for the number of stocks finding new highs versus those falling to new lows. At last check, the New York Stock Exchange (NYSE) shows 71 stocks finding fresh tops, while the Nasdaq has 29 at new peaks. Among the stocks reaching new heights in today's session are Merck & Co., Inc. (NYSE:MRK - 43.05), Quest Diagnostics Inc (NYSE:DGX - 63.78), and Texas Industries, Inc. (NYSE:TXI - 42.30).

Healthcare concern MRK is soaring in today's session, tagging a four-year peak of $43.18 mid-flight. The stock was 4.5% higher at last check, bringing its year-over-year gain to a respectable 20.5%. The upward movement comes amid this morning's bevy of bullish brokerage attention, following a successful late-stage trial of Merck's osteoporosis drug Odanacatib. Additional analyst-related tailwinds could be in store, with the consensus 12-month price target of $42.21 representing a 2% discount to today's fresh peak.

DGX has stair-stepped its way to a five-year high of $63.98 in today's trading. The equity is now sporting a formidable 9.9% year-to-date advance, to the cheers of options players. Speculators at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 1.93 calls for every put over the past 50 sessions. This ratio ranks higher than 90% of other such readings taken in the last year, implying a preference for bullish bets over bearish in recent months. Could this be in preparation of next Wednesday's early morning turn in the earnings confessional? DGX has a recent history of besting analysts' per-share projections, and Wall Street is expecting a second-quarter profit of $1.17 per share this time around.

Construction concern TXI rallied to a new annual high of $42.94 today, after the company swung to a fiscal fourth-quarter profit, breaking a 10-quarter streak of quarterly losses. Today's 12.5% post-earnings pop has the shares up more than 39% in 2012. Despite this impressive year-to-date advance, investors have remained wary. Short interest accounts for 35% of the equity's float. Additionally, TXI's Schaeffer's put/call open interest ratio (SOIR) of 3.11 ranks in the 79th percentile of its annual range, suggesting short-term speculators are more put-heavy than usual. A capitulation by some of the weaker bearish hands could assist TXI in its recent sprint up the charts.

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Click here to read the new low list, including SUPERVALU's(NYSE:SVU) miserable milestone.


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