Are New Highs Ahead for Nucor Corporation (NUE)?

Nucor Corporation (NYSE:NUE) has put in a strong technical showing, but not everyone is convinced

Jun 20, 2016 at 2:12 PM
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Steel stock Nucor Corporation (NYSE:NUE) has been a standout on the charts, boasting a year-to-date lead of 28%. What's more, NUE hit an analyst-induced annual high on June 8, and was last seen just a chip-shot away from this notable mark -- up 2.4% at $51.55. According to Schaeffer's Senior Quantitative Analyst Rocky White, though, skepticism both in and out of the options pits has been growing on this outperformer -- making NUE stock a potential diamond in the rough for contrarian traders.

In the options pits, for instance, NUE's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio has jumped to 1.70 from 1.59 over the past two weeks. What's more, the current ratio ranks just 1 percentage point from a 52-week peak, meaning put options have been bought to open over call options at a near-annual-high clip.

Mirroring this put-heavy configuration is NUE's Schaeffer's put/call open interest ratio (SOIR) of 1.22. Not only does this show that put open interest outweighs call open interest among options expiring in three months or less, but it ranks in the 92nd percentile of its annual range. Simply stated, short-term speculators are more put-skewed than usual toward NUE stock.

Outside of the options pits, short interest is up 36% year-over-year to 8.1 million shares. It would take nearly four sessions to cover these bearish bets at NUE's average daily pace of trading. Should the shares continue their trek into annual-high territory, a capitulation among bearish bettors both in and out of the options arena could help fuel the fire.

Meanwhile, five out of 11 analysts maintain a "hold" or "strong sell" rating on Nucor Corporation (NYSE:NUE), while the average 12-month price target of $53.20 is within striking distance of the stock's current perch. A round of upgrades and/or price-target hikes could create fresh tailwinds for the shares. Just this morning, in fact, Clarksons Platou boosted its price target for NUE to $56 from $55, which may explain today's burst higher.

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