Are the Glory Days Over for These March Outperformers?

Transocean LTD (NYSE:RIG), United States Steel Corporation (NYSE:X), and Stratasys, Ltd. (NASDAQ:SSYS) have put in strong showings in March

by Karee Venema

Published on Mar 8, 2016 at 3:59 PM
Updated on Mar 8, 2016 at 4:01 PM

Stocks have kicked off a historically bullish period with a bang, with all three major market indexes flirting with 3% month-to-date leads. In fact, the S&P 500 Index's (SPX) 3.5% advance in the first four trading days of March was its best start to the month ever over the same time frame. With this in mind, Schaeffer's Senior Quantitative Analyst Rocky White drilled down on stocks that trade at least a million shares per day -- or trade weekly options -- and closed above $8 on Monday, March 7, to see which ones have been sizzling so far this month. Crossing the screen were rig operator Transocean LTD (NYSE:RIG), steel stock United States Steel Corporation (NYSE:X), and 3-D printing firm Stratasys, Ltd. (NASDAQ:SSYS).

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bearish reversal in crude futures and news of a deferred rig delivery are weighing on RIG this afternoon, with the shares off 10% at $11.44. Heading into today's trading, though, the stock was sporting a month-to-date advance of nearly 47%. What's more, the shares are trading back above their 80-day moving average for the first time since late November. Amid this rally, RIG's 14-day Relative Strength Index (RSI) settled last night at 73 -- in overbought territory. In other words, a near-term pullback may have been in cards.

In the options pits, call volume has reached fever pitch in recent weeks -- although, some of the action may be attributable to short sellers. Regardless, those currently purchasing Transocean LTD's near-term options are willing to pay for inflated volatility expectations. In fact, the security's Schaeffer's Volatility Index (SVI) of 92% sits just 10 percentage points from a 52-week high.

X, meanwhile, is off 9.1% today at $12.32, following weak data out of China and a skeptical outlook from Goldman Sachs. Additionally, the stock's 14-day RSI settled last night at a lofty 81. Nevertheless, the security remains 35% higher on the month -- and is lingering near levels not seen since last November.

Despite the stock's overall strong technical showing this month, skepticism remains high. While the equity is on the short-sale restricted list today -- which may be why puts are crossing at two times what's typically seen at this point in the day -- nearly 37% of United States Steel Corporation's float is sold short, or 6.1 times the average daily pace of trading.

well-received turn in the earnings confessional helped SSYS start March off on the right foot, with the shares up 32% month-to-date. While the stock is down 10.6% at $24.86 this afternoon, an overbought 14-day RSI of 84 and a swift rejection at its 200-day moving average may be to blame.

On the sentiment front, option traders have been buying to open puts relative to calls at a quicker-than-usual clip in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Stratasys, Ltd.'s 10-day put/call volume ratio of 0.80 rests in the 76th annual percentile.


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