AMD, Analog Devices Stocks Could Spook Shorts

Semiconductor stocks Advanced Micro Devices, Inc. (NASDAQ:AMD) and Analog Devices, Inc. (NASDAQ:ADI) remain surrounded by skepticism

Mar 14, 2017 at 3:12 PM
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Short interest on the S&P 500 Index (SPX) has started to edge higher for the first time since mid-November, and a handful of stocks could be ripe for a short squeeze, as Schaeffer's Senior Quantitative Analyst Rocky White recently determined. Among the list of uptrending equities that could be on the cusp of a short-covering rally are several semiconductor names, including Advanced Micro Devices, Inc. (NASDAQ:AMD) and Analog Devices, Inc. (NASDAQ:ADI). Below, we'll take a look at how AMD and ADI shares are faring, and how Wall Street is positioned toward the semiconductor stocks.

AMD Stock Has More Than Doubled in 6 Months

AMD stock rallied on Monday, amid news the stock will join the SPX next week. The equity has given back 1.2% today, to trade at $14.11, but remains more than 400% higher year-over-year. In fact, AMD has more than doubled in just the past six months, touching a nine-year peak of $15.55 on Feb. 28. From an even longer-term perspective, AMD blew past the $9-$10 area -- a roadblock for the shares from 2009-2011 -- and pullbacks could be supported in the $12 area, which represents a 23.6% Fibonacci retracement of the stock's decline from early 2006 to late 2008.

While AMD short interest dipped nearly 1% during the most recent reporting period, a healthy 13.2% of the stock's float remains dedicated to these bearish bets. In addition, just half of the 20 analysts following AMD offer up a "buy" or better rating, despite the stock's massive ascent over the past year. A continued exodus among short sellers, or a round of overdue upgrades, could add fuel to AMD's fire.

And for those betting on higher highs for AMD in the short term, now is an opportune time to pick up near-term options. The stock's Schaeffer's Volatility Index (SVI) of 60% is higher than just 20% of all other readings during the past year, indicating AMD's near-term contracts are attractively priced, historically speaking. Meanwhile, Advanced Micro Devices sports a Schaeffer's Volatility Scorecard (SVS) of 99 -- indicating AMD has tended to exceed options traders' volatility expectations during the past year.

ADI Short Interest Would Take Six Days to Buy Back

ADI stock has rallied roughly 50% in the past 12 months, and was last seen 0.5% higher at $83.16, thanks to a reinstated "outperform" rating and $100 price target at Credit Suisse. The stock nabbed a 16-year peak of $84.24 just last week, and hasn't been north of $100 since September 2000.

Nevertheless, short interest on ADI jumped 14.3% during the past two reporting period, and now represents nearly six sessions' worth of pent-up buying demand, at the stock's average daily trading volume. Options buyers are picking up ADI puts over calls at a faster-than-usual clip, too, per the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). In fact, the stock's 10-day put/call volume ratio of 2.44 is in the 86th percentile of its annual range. Should short sellers or bearish options players hit the bricks, ADI could extend its quest for new highs. 

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