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Highs & Lows: Applied Materials, Xerox, and Marvell Technology

AMAT, XRX, and MRVL dropped to new annual lows

by 11/16/2012 2:21 PM
Stocks quoted in this article:

U.S. stocks have traded on both sides of breakeven today, erasing early gains on word of "constructive" talks about the fiscal cliff. Nevertheless, the number of equities drifting to new bottoms is overshadowing those at new highs. Currently, the NYSE is counting 141 new lows and just 11 peaks, while the Nasdaq tallies 151 nadirs and only eight new highs. Among the stocks charting notable moves are Applied Materials, Inc. (NASDAQ:AMAT - 10.18), Xerox Corporation (NYSE:XRX - 6.21), and Marvell Technology Group Ltd. (NASDAQ:MRVL - 7.38).

  • Semiconductor concern AMAT tripped to a 13-month low of $9.95 today, after the company posted a fiscal fourth-quarter loss. In light of this news, Caris lowered its price target on the stock by $1 to $11. And there could be further downside ahead for the shares, should the bullish holdouts jump ship. The average 12-month price target of $12.44 represents a 25% premium to today's fresh low, and six out of 16 analysts still rate the stock a "buy" or better.

  • Dow component XRX isn't faring too well on the charts. The stock has underperformed the broader S&P 500 Index (SPX) by 13 percentage points during the past 40 sessions, and has shed more than 22% in 2012. Earlier today, the shares fell to the $6.10 mark -- their worst price since July 2009. Considering this technical backdrop, it's rather surprising to find a surplus of optimism in the options space. The security's 10-day call/put volume ratio of 12.10 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) indicates that traders have bought to open 12 XRX calls for every put during the past two weeks. Plus, this ratio stands in the 60th annual percentile, pointing to a healthier-than-usual appetite for bullish bets of late. What's more, the security's 50-day call/put volume ratio of 12.86 is just 10 percentage points from an annual high.

  • After an unimpressive turn in the earnings spotlight, MRVL spiraled to a three-year nadir of $7.05 today, pulling its year-to-date loss to nearly 47%. Prior to MRVL's quarterly report, however, the options arena appeared rather hopeful. During the past 10 days, traders on the ISE, CBOE, and PHLX have bought to open 3.07 calls for every put on the stock. Elsewhere on the Street, short interest ballooned roughly 31% during the past two reporting periods, suggesting the recent acceleration in call buying could be related to hedging activity by the shorts. But there's plenty of room for more bears to play the stock's overall downtrend, as it would take less than one full day for these pessimistic positions to unwind.

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