Buzz Stocks: Eli Lilly and Co, Twitter Inc, and EMC Corporation

Today's stocks to watch include Eli Lilly and Co (LLY), Twitter Inc (TWTR), and EMC Corporation (EMC)

Oct 12, 2015 at 10:20 AM

U.S. benchmarks are mixed this morning, as traders look ahead to several blue-chip earnings reports later this week. Today's equities in focus are drug manufacturer Eli Lilly and Co (NYSE:LLY), social media network Twitter Inc (NYSE:TWTR), and information technology company EMC Corporation (NYSE:EMC).

LLY is down 7.7% to $79.56 after the company announced that it has stopped the development of its lead heart drug, evacetrapib. The development was stopped because evacetrapib was not found effective in a late-stage trial for treatment of atherosclerosis. Additionally, Jefferies lowered its price target on LLY to $105 from $120. Although shares of Eli Lilly and Co have dropped, they have found support at their 10-month moving average -- a trendline the stock has not finished a month below since December 2013. Despite LLY's solid long-term performance (gaining 63% since its December 2013 low of $48.88), bears have had the run of the option pits of late. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), LLY's 10-day put/call volume ratio of 2.06 is higher than 91% of similar readings taken during the past 52 weeks. Should LLY resume its upward trajectory, an unwinding of these bearish bets could translate into fresh tailwinds.

According to a report that surfaced late Friday, TWTR is planning company-wide layoffs this week (just a week after appointing co-founder Jack Dorsey as CEO and days after Prince Alwaleed bin Talal and his investment company increased their stake in the firm). While there was no speculation on the number of layoffs Twitter Inc is planning, it is believed that the cuts will impact most of the firm's departments. The shares are down 5.2% to $29.24 this morning. Technically, the shares rallied in reaction to last week's news, but the run was capped by their 20-week moving average. The stock has proven unable to finish a week above this trendline since late April.

EMC is making history this morning, as Dell announced that it is purchasing EMC Corporation for roughly $67 billion - bringing an end to a week of speculation over the potential deal. Shares of EMC are 1.2% lower at $27.53 after the announcement -- paring a portion of last week's gains. Option bulls jumped in on EMC last week thanks to the M&A speculation, as the firm's 10-day call/put volume ratio on the ISE/CBOE/PHLX rose to 4.32 from 1.53 over the five-day time span, and now ranks in the 75th percentile of similar readings taken in the past year.

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