Will Thanksgiving Week Drill Commodity Stocks Again?

Halliburton Company (HAL), Golar LNG Limited (USA) (GLNG), and Rio Tinto plc (ADR) (RIO) have historically struggled during the week of Thanksgiving

Nov 20, 2015 at 3:19 PM
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Earlier this week, Schaeffer's Senior Quantitative Analyst Rocky White identified 30 Thanksgiving week outperformers, based on recent history. That led us to look more closely at a pair of travel stocks and chipmakers that may be on the brink of a holiday breakout.

However, as is always the case with the stock market, there are both winners and losers. And based on the chart below, courtesy of White, commodity stocks -- like financials -- tend to tank during the holiday-shortened week. Therefore, we'll take a look at three: Halliburton Company (NYSE:HAL), Golar LNG Limited (USA) (NASDAQ:GLNG), and Rio Tinto plc (ADR) (NYSE:RIO).

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During the past decade, HAL has advanced just three times during the week of Thanksgiving. On average, the stock has lost 1.4%. On the charts, the shares have been churning in the $37-$40 range since mid-October, and are down 3.3% year-to-date at $38.02. If history repeats itself, it may be enough to knock option traders from their bullish perch. During the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Halliburton Company has racked up a call/put volume ratio of 1.61 -- in the 63rd annual percentile. From a contrarian perspective, an unwinding of this optimism could result in headwinds.

Next up is GLNG, which has posted positive returns just twice during the past 10 Thanksgiving weeks, and averaged a loss of 2.4%. A repeat performance would be more of the same for a stock that's given up roughly 23% of its value year-to-date, last seen at $27.93. It could also force the brokerage crowd to start re-evaluating its bullish stance, potentially triggering selling pressure. A surprising eight of nine covering analysts have handed out "buy" or better endorsements on Golar LNG Limited, leaving it vulnerable to future downgrades. Put buyers are currently positioned to benefit from additional downside in the shares, based on GLNG's 10-day ISE/CBOE/PHLX put/call volume ratio of 2.63 -- an annual high.

Finally, RIO has suffered losses in seven of the past 10 Thanksgiving weeks, typically retreating 3.7%. Longer term, the stock has surrendered about one-quarter of its value in 2015, last seen down 0.9% at $34.64. In recent months, however, traders at the ISE, CBOE, and PHLX have been buying to open calls over puts at a faster-than-usual clip. Specifically, Rio Tinto plc's 50-day call/put volume ratio of 0.64 outstrips two-thirds of all comparable readings from the prior 52 weeks. Should these bulls hit the exits, the shares could suffer.

 

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