Published on Jul 1, 2020 at 2:39 PM
Updated on Jul 1, 2020 at 2:41 PM
  • Best and Worst Stocks
  • Quantitative Analysis

It's officially July, and things are only heating up as the uncertainty surrounding the market still weighs on investors' minds. There's a whole new slate of seasonality trends to keep an eye on, and Schaeffer's Senior Quantitative Analyst Rocky White has released the list of the best S&P 500 stocks to own in July over the past 10 years. One notable name on the list is VF Corp (NYSE:VFC), with the apparel concern boasting an intriguing technical setup as well.

More specifically, looking back over the last decade, VF stock boasts an average June return of 6.3%, with nine out of 10 returns positive. That's incredible for a stock that's just outside of the top 10, and the only personal goods name on the list.

Best of July

Digging deeper, VFC -- which at last check was trading flat at $60.82 -- is off 14% from its June 5, four-month high of $71.25. However, the stock has managed to tack on 25.1% in the past three months, and has found a solid level of support at its 70-day moving average, which captured a brief pullback just last week.

 

The options pits show that puts have been popular over the past 10 weeks. Specifically, VFC's 50-day put/call volume ratio of 1.63 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits in the 98th percentile of its annual range, suggesting a healthier-than-usual appetite for bearish bets of late. In simpler terms, if this bearish sentiment were to unwind, it could give VFC another boost up the charts.

The good news for options traders is that VFC's near-term options can be had for a bargain at the moment. The security's Schaeffer's Volatility Index (SVI) stands at 47%, ranking in the 29th percentile of its annual range. This indicates that now is an attractive time to jump aboard the VF stock with options.

Published on Jun 30, 2020 at 10:12 AM
Updated on Jun 30, 2020 at 11:25 AM
  • Best and Worst Stocks
  • Quantitative Analysis
  • Editor's Pick

July is right around the corner, and Schaeffer's Senior Quantitative Analyst Rocky White is back once again to outline the best and worst stocks to own for the new month. As gold prices continue to climb in the face of stark economic uncertainty, Newmont Corporation (NYSE:NEM) has tacked on 31.5% this quarter. However, as July heats up, the gold stock could be due to cool off. In fact, NEM shows up on a list of the 25 worst S&P 500 performers in July, looking back over the past 10 years.

More specifically, looking back over the last decade, Newmont stock suffered an average June loss of 2.4%, with only four out of the 10 returns positive. That's good for second-worst on the list, and the only mining name to be found among the lineup. At last check, NEM was trading at $59.02. What's more, the shares have encountered stiff resistance at their 40-day moving average in June, despite a 35.6% year-to-date gain. 

Worst of July

In the options pits, traders are focused on calls. Newmont stock's 10-day call/put volume ratio of 4.2 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits higher than 76% of readings in its annual range. In other words, long calls are being picked up at a much quicker-than-usual rate.

Echoing this, NEM's Schaeffer's put/call open interest ratio (SOIR) of 0.63 sits in the low 7th percentile of other readings from the 12 months. This suggests short-term option players have rarely been more call-biased.

Daily Stock Chart NEM

Published on Mar 28, 2017 at 12:18 PM
Updated on Jun 24, 2020 at 10:16 AM
  • Best and Worst Stocks
  • Indexes and ETFs
  • Quantitative Analysis

The best time of year to buy stocks will hit its final stretch in April, but not before the second quarter kicks off. Schaeffer's Senior Quantitative Analyst Rocky White has compiled data on how major exchange-traded funds (ETFs) and individual stocks have historically performed during 2Q. As you can see in the chart below, shares of the SPDR S&P Biotech ETF (XBI) and SPDR S&P Pharmaceuticals ETF (XPH) have outperformed over the past decade, ending the second quarter positive 90% of the time, and gaining an average of 5.3% and 4.7%, respectively.

Best 2Q ETFs March 28

Bearish Traders Have Pounced on XBI, XPH Shares

At present, shares of XBI are up about 37% year-over-year at $69.50, after a recent pullback found support at the 40-day moving average. Options traders have been betting on more gains, too, purchasing calls over puts at a faster-than-usual clip in recent weeks. Specifically, SPDR S&P Biotech ETF has a 10-day call/put volume ratio of 1.05 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) -- higher than 76% of comparable readings from the past year.

XPH has been rather less impressive over the last 12 months, adding about 5% to trade at $42.26, and recently running into trouble at the 200-day moving average. Amid these technical troubles, short sellers have been decreasing their bearish exposure to SPDR S&P Pharmaceuticals ETF. Since topping out at a record high of 3.6 million shares in March 2016, short interest has fallen by nearly 81%.

Vertex Pharmaceuticals, McKesson Among Best 2Q Stocks

Turning our attention to individual stocks, the biotech and drug sectors have made a strong showing in the second quarter over the last 10 years. Positive 90% of the time, with a whopping 18.5% average return, is biotech Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX). Not far behind, drugmaker McKesson Corporation (NYSE:MCK) has also had a positive second quarter in nine of the past 10 years, adding 7.9% in the period, on average.

Best 2Q Stocks March 28

The past year hasn't always been easy for shares of VRTX, but the stock has rallied hard off its December low, adding 26% to trade at $89.86, with the help of its 40-day moving average. Analysts have mixed opinions on the stock, as half rate the shares a "buy" or better, while half maintain a "hold" recommendation. Options traders appear more clear in their bullish outlooks, though, with the equity's 10-day call/put volume ratio of 5.87 on the ISE, CBOE, and PHLX seated in the 81st annual percentile.

That said, it's a much more attractive time to sell premium on Vertex Pharmaceuticals Incorporated than to buy it. With a Schaeffer's Volatility Index (SVI) of 62% at a 12-month high, the stock's short-term options are pricing in historically inflated volatility expectations.

Meanwhile, MCK is in the red on a year-over-year basis, and has yet to close its late-October post-earnings bear gap. But the shares have tacked on more than 6% so far in 2017 to trade at $149.52, and found a foothold in the $145 neighborhood -- home to its 80-day moving average. The stock could stand to benefit from a round of upbeat analyst attention, considering 10 out of 12 tracking firm rate McKesson Corporation a tepid "hold" at the moment.

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Published on Mar 29, 2017 at 12:14 PM
Updated on Jun 24, 2020 at 10:16 AM
  • Quantitative Analysis
  • Indexes and ETFs
  • Best and Worst Stocks

Yesterday we examined some of the best stocks and exchanged-traded funds (ETFs) based on performance in the second fiscal quarter over the past 10 years. Today we're switching gears to examine the serial laggards for the upcoming three-month period. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, one of the sectors least likely to give solid returns in the quarter is Retail. In fact, the SPDR S&P Retail ETF (XRT) has given a positive return just 50% of the time over the last decade, with an average gain of 0.2%.

Worst 2Q ETFs March 29

Option Bulls Continue to Target XRT as Retail Sector Lags

Shares of XRT have shed 8.7% year-over-year at $42.23. According to our internal Sector Scorecard, only 35% of the 66 components we follow under this umbrella are currently trading above their 80-day moving averages.

While retail stocks rally today in response to some upbeat earnings results, XRT continues to trade below resistance at the declining 50-day moving average -- a trendline it hasn't topped on a closing basis since Jan. 4. Meanwhile, options traders have yet to shy away from optimistic bets. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the SPRD S&P Retail ETF has a 50-day call/put volume ratio of 0.85 -- put-skewed on an absolute basis, but representing an annual bullish high.

KSS Stock, TGT Stock Among the Worst 2Q Performers

Shifting our view to individual stocks, several retailers appear on the list of 2Q's worst performers. Kohl's stock has finished the second quarter positive only twice in the last 10 years, averaging a painful 7.7% loss. A bit further down the list is Target stock, which hasn't fared much better, finishing the period higher just 30% of the time, with an average 1.8% decline.

Worst 2Q Stocks March 29

Not All Put Players are Bearish on KSS Stock

Sitting on a 19% year-to-date deficit at $39.93, KSS stock has spent more than a month bumping up against resistance at its 50-day moving average. As such, it's unsurprising sentiment toward the shares already appears skewed to the bearish side. Of 14 analysts follow KSS, 11 rate the stock a "hold" or "strong sell." Short interest now accounts for over 13% of the equity's available float, and would take over a week to buy back, at the stock's typical daily volume. Still, these bearish bets have fallen since their January peak, leaving room for further pessimists to pile on.

In the options pits, KSS sports a 10-day put/call volume ratio of 3.26 across the ISE, CBOE, and PHLX -- a reading in the 87th annual percentile. That doesn't mean everyone's a bear though. Over the past 20 sessions, the stock has seen roughly 1.5 puts sold to open for each one bought. In fact, the top open interest position by a mile is the April 35 put, where the major exchanges suggest a majority of positions were opened by put writers, betting on a short-term floor.

That said, it appears a much more attractive time to buy near-term options on Kohl's Corporation (NYSE:KSS) than to sell them. With a Schaeffer's Volatility Index (SVI) of 33% -- in the low 8th percentile of its annual range -- premium is well-priced from a volatility standpoint. Plus, a Schaeffer's Volatility Scorecard (SVS) of 80 suggests KSS stock has outperformed the volatility expectations priced in over the past year.

Long Calls Remain Popular on Battered TGT Stock

Though the shares are enjoying today's sector rally, up 3.4% to $55.38, TGT stock has shed 33.8% over the past 12 months, notching a multi-year low just last week. Analysts have set their expectations low, with only four of the 18 tracking firms recommending buying the shares. But that skepticism doesn't seem to extend to options traders, who have changed course in recent weeks.

Specifically, speculators have been purchasing TGT calls at double the rate of puts over the past 10 days on the ISE, CBOE, and PHLX. The resulting call/put volume ratio of 2.06 ranks higher than 86% of the past year's readings. Echoing this call skew is the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.75, which rests just 1 percentage point from an annual low, indicating call open interest outweighs put open interest among near-term options to an extent rarely seen in the last 12 months.

It looks like a prime time for short-term options buyers to get in on the action, too. With an SVI of 18% -- in just the 9th annual percentile -- Target Corporation's (NYSE:TGT) near-term options are pricing in muted volatility expectations. What's more, an SVS of 99 suggests TGT stock has made significantly larger moves over the past year, compared to what options traders priced in.

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Published on Mar 30, 2017 at 11:48 AM
Updated on Jun 24, 2020 at 10:16 AM
  • Quantitative Analysis
  • Best and Worst Stocks

With the month of March wrapping up, we're heading into the final month of what's traditionally considered the most bullish time of the year for stocks. That doesn't mean April will bring gains for everyone, though. Schaeffer's Senior Quantitative Analyst Rocky White compiled the following table with the 10 worst performers on the S&P 500 Index (SPX) during the month of April over the past 10 years. While the list of laggards is heavily populated with finance names, a different stock popped out at us: Masco Corp (NYSE:MAS). Not only have shares of MAS historically faltered in April, but the building stock also appears among the worst performers in the second quarter.

Worst April Stocks March 30

Masco Stock Set to Slide if Past is Precedent

Over the past decade, MAS has finished April higher only twice, and has ended the month with an average return of just 0.1%. But history suggests the losses could get even worse from there. The equity has averaged a 2.6% loss over the whole second quarter, positive only 30% of the time over the past 10 years. And at $33.82, MAS shares are down 9.5% from their July highs, but optimism remains high. 

Analyst Downgrades, Rising Short Interest Could Sink MAS Stock

Starting with the brokerage bunch, 10 analysts currently recommend buying the shares, while three rate MAS a "hold," and not one calls it a "sell." A round of downgrades from analysts could send the stock sliding. Meanwhile, short interest levels aren't far off the record lows seen just over a month ago, currently representing less than 2% of the security's total float. The shares could be in trouble should these bearish bets start piling up.

Options Traders Favor Bullish Bets; Premium Can Be Purchased on the Cheap

In the options pits, absolute volume tends to run light. In fact, total open interest on MAS options is seated in the low 8th annual percentile, with fewer than 28,000 contracts outstanding. But the action in recent months has been strongly skewed to the call side. In fact, over the past 50 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators purchased 18.69 calls for every put.

It could be an appealing time for short-term options traders to place fresh bets on Masco Corp (NYSE:MAS), though. The stock holds a Schaeffer's Volatility Index (SVI) of 18% -- lower than 98% of all comparable readings taken in the past 12 months. Simply put, MAS' near-term options are currently pricing in historically low volatility expectations.

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Published on May 25, 2017 at 10:22 AM
Updated on Jun 24, 2020 at 10:16 AM
  • Indexes and ETFs
  • Quantitative Analysis
  • Best and Worst Stocks
U.S. markets will be shuttered for Memorial Day on Monday, resulting in a four-day trading week for Wall Street. In recent years, one sector has significantly outperformed during short trading weeks: drug stocks, as represented by the SPDR S&P Biotech ETF (XBI). Below, we'll take a look at XBI, as well as biotech stocks Puma Biotechnology Inc (NASDAQ:PBYI) and Amicus Therapeutics, Inc. (NASDAQ:FOLD), which top the list of the 25 best stocks to own next week.

Other ETFs Don't Hold a Candle to XBI

Since 2010, the XBI exchange-traded fund (ETF) has been the best during short weeks, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. In fact, the SPDR S&P Biotech ETF has ended short weeks in the black 72.7% of the time, with an average return of 1.33%. That's nearly double the second-best ETF by average return -- the First Trust Dow Jones Internet Index Fund (FDN).

best ETFs during short trading weeks


XBI has been in a channel of higher highs and lows since February 2016, and sports a year-over-year gain of 25.4%. Speculators looking to place short-term bets on XBI can do so at a relative discount; the ETF's Schaeffer's Volatility Index (SVI) of 21% is lower than 96% of all other readings from the past year, pointing to attractively priced near-term options. Plus, XBI sports a Schaeffer's Volatility Scorecard (SVS) of 66, suggesting the biotech ETF has exceeded options traders' volatility expectations during the past year.

Drug Stocks Outperform In Short Weeks

Digging into the specific stocks to watch next week, drug/biotech stocks dominate the list, which White compiled by looking at optionable securities that trade at least a million shares per day and are above $7. In fact, the top four stocks on the list fall under the "drugs" or "biomedics" umbrellas.

best stocks to own during short trading weeks

PBYI Stock Could Stay Red-Hot

PBYI has averaged a return of 3.07% in short weeks, going back to 2010, with a 61.3% win rate. The stock has been red-hot lately, more than doubling in the past week to hit an annual high of $80 today, after a Food and Drug Administration (FDA) panel backed Puma Biotechnology's breast cancer drug. This morning, analysts are applauding PBYI stock, which earned an upgrade to "outperform" from "market perform" at Cowen, and price-target hikes from three other brokerage firms. Citigroup's new target of $105 was the most ambitious, representing a 32% premium to Puma's current price. 

Some traders may be concerned about PBYI being overbought, as indicated by the stock's 14-day Relative Strength Index (RSI) of 87. However, there's plenty of pessimism that could unwind and drive Puma Biotechnology shares even higher. Short interest represents nearly one-third of PBYI's total available float, or about eight sessions' worth of pent-up buying demand, at the biotech's average pace of trading. Further, options buyers have been more bearish than usual; the stock's 10-day put/call volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) of 3.03 is higher than 89% of all other readings from the past year.

FOLD Stock Tops the List

Amicus Therapeutics stock is at the top of the list, averaging the best return in short weeks since 2010: 3.74%. FOLD stock has ended these weeks in the black 60.6% of the time, per White's data. The shares have nearly doubled since touching an annual low of $4.41 in mid-December, last seen flirting with year-to-date highs in the $8.70 vicinity.

As with PBYI, Amicus Therapeutics stock could also benefit from a mass exodus of bears. Short interest accounts for more than a quarter of FOLD's total available float, and it would take a whopping 27 sessions to repurchase these pessimistic positions, at the equity's average daily trading volume. That's plenty of fuel for a short squeeze to add fuel to the drugmaker's fire. 
Published on May 25, 2017 at 12:57 PM
Updated on Jun 24, 2020 at 10:16 AM
  • Quantitative Analysis
  • Technical Analysis
  • Best and Worst Stocks
The shares of drugmaker Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) have been bumping up against resistance in the $120-$122 neighborhood -- roughly double VRTX stock's 2014 lows, and an area of support when the shares were on the verge of a breakout to record highs back in 2015. However, if recent history is any indicator, Vertex stock could surge in the short term -- and options traders may want to strike now.

VRTX Stock Testing Historically Notable Moving Average

VRTX stock gapped higher in late March, thanks to encouraging data on Vertex's cystic fibrosis treatment. The shares subsequently touched an annual high of $121.96 on May 2, but have managed just one close above the $120 level. The stock is now testing support at its ascending 40-day moving average, which has been a bullish signal in the past. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, after VRTX stock's last eight tests of the 40-day, the shares went on to average a one-month gain of 3.17%, and were higher 63% of the time. From VRTX stock's current perch at $118.70, a 3.17% gain would have the shares at around $122.50 -- above recent resistance and in new-high territory.

vertex pharmaceuticals vrtx stock chart


VRTX Among Best Stocks, Options to Own Right Now

Meanwhile, Vertex Pharmaceuticals is historically the best stock to own in the second quarter, averaging a gain of 18.5% during the past 10 years. So far this quarter, Vertex has added 8.5%. What's more, VRTX stock also tends out outperform in short trading weeks -- which could bode well for the equity next week, after Memorial Day. According to recent data from White, VRTX has averaged a 1.48% gain in short trading weeks, going back to 2010, with a healthy win rate of 61.8%.

Despite the biotech's impressive year-to-date ascent of more than 61%, analysts are only lukewarm toward VRTX. In fact, half of the analysts following VRTX maintain tepid "hold" ratings, leaving the door wide open for potential upgrades to lure more buyers to the table.

Options traders looking to roll the dice on a short-term rally for Vertex stock can do so at a relative discount, too. The equity's Schaeffer's Volatility Index (SVI) of 26% is lower than 95% of all other readings from the past 12 months, indicating VRTX's near-term options are at bargain-basement prices right now, from a historical volatility perspective.
Published on May 25, 2017 at 3:03 PM
Updated on Jun 24, 2020 at 10:16 AM
  • Best and Worst Stocks
Energy stocks are in focus today, as oil prices crumble in the wake of a disappointing supply cut decision at today's Organization of the Petroleum Exporting Countries (OPEC) meeting. The sector could garner even more negative attention after the Memorial Day weekend, considering several names are featured on the below list of the 25 worst stocks to own during short trading weeks, according to data compiled by Schaeffer's Senior Quantitative Analyst Rocky White. Unlike these best stocks to own during a short week, put buyers may want to drill down on Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR), Transocean LTD (NYSE:RIG), and WPX Energy Inc (NYSE:WPX).

worst stocks to own in short trading weeks

Short Interest Could Create More Trouble for PBR Stock

Since 2010, PBR has averaged a loss of 1% during short trading weeks, and has been positive less than 37% of the time. This would just exacerbate recent technical troubles, with PBR shares down more than 15% since its May 16 close, when Brazil stocks got smacked as corruption allegations were levied against the country's president, Michel Temer. What's more, PBR stock is now trading south of its 80-day and 200-day moving averages.

Amid this negative price action, short sellers have been increasing their exposure, with short interest up 31% in the most recent reporting periods. These bearish bets account for just 1.2% of PBR stock's available float, meaning continued selling pressure from the shorts could translate into bigger headwinds for Petrobras shares.

Sinking RIG Stock at Risk of Bearish Analyst Notes

RIG stock has averaged a loss of 0.9% during short trading weeks, looking back to 2010. The energy stock has been positive 36.4% of the time over that same time frame. This would be nothing new for Transocean shares, which have been in steady decline in recent months. Including today's 6.9% drop that has RIG trading at $9.73, the stock is staring at a 34% year-to-date deficit.

Most analysts are skeptical of RIG shares, but three of the 18 covering brokerages maintain a "strong buy" rating. Plus, the average 12-month price target for Transocean stock stands at $12.75 -- 31.4% above current trading levels. This leaves the door open for downgrades and/or price-target cuts to pressure the stock. Earlier, Jefferies lowered its price target on RIG stock to $11.50.

WPX Worst Stock to Own During Short Trading Weeks

WPX is the worst stock to own during short trading weeks, averaging a loss of 1.1% over the past seven years. The shares have also turned in a positive performance just 39% of the time. More broadly, WPX stock has shed 19.2% in 2017 -- pressured by a trendline connecting a series of lower highs -- and is down 3% today to trade at $11.76.

In spite of this downward spiral, not a single one of the 18 analysts covering WPX stock maintain a "sell" rating. While well-deserved downgrades could translate into selling pressure for WPX Energy shares, continued short selling could also spell trouble for the security. Short interest jumped 11% in the two most recent reporting periods, but accounts for a modest 6.5% of WPX's available float.
Published on May 30, 2017 at 11:00 AM
Updated on Jun 24, 2020 at 10:16 AM
  • Quantitative Analysis
  • Technical Analysis
  • Best and Worst Stocks
If recent history is any indicator, bullish stock and options traders may want to consider a pair of biotechs before June kicks off on Thursday. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, two healthcare stocks tend to outperform in the month of June, going back 10 years: genetic analysis provider Illumina, Inc. (NASDAQ:ILMN) and heart valve manufacturer Edwards Lifesciences Corp (NYSE:EW). Below, we'll take a look at ILMN and EW stocks, as well as the 25 best stocks to own in June.

ILMN, EW Top 25 Best Stocks to Own in June

Below are the 25 best stocks to own next month, if the past 10 years is prologue. White looked at S&P 500 Index (SPX) components that have traded at least eight years, with ILMN topping the list. Illumina stock has averaged the best monthly return of all SPX components, tacking on a healthy 6.52%. Plus, ILMN has ended June higher 80% of the time over the past 10 years.

Edwards Lifesciences shares are a close second. EW stock has averaged a June gain of 5.95%, going back 10 years, and ended the month higher 80% of the time. In fact, ILMN and EW make up half the SPX stocks with a win rate of 80% in June.

best stocks to buy in june

Short Squeeze, Upgrades Could Push ILMN Stock Higher

Illumina shares have added nearly 38% in 2017, thanks to a massive mid-January bull gap, stemming from the company's earnings forecast and new genetic sequencing platform. However, earlier this month, ILMN stock ran into a familiar wall in the $185-$190 neighborhood, which capped the stock's advances in mid-2016. This region also limited ILMN's momentum in late 2015. At last check -- and ahead of the company's annual shareholder meeting later today -- Illumina shares were fractionally higher at $175.95.

illumina stock ILMN chart


An unwinding of pessimism could certainly help ILMN extend its journey higher and barrel through resistance. Short interest on the stock represents a week's worth of pent-up buying demand, at ILMN's average pace of trading. Meanwhile, eight out of 18 analysts maintain "hold" or "strong sell" opinions of the shares, leaving the door open for potential upgrades to lure more buyers to the table.

For options traders hoping ILMN once again outperforms in June, its short-term contracts are very attractively priced right now; the stock's Schaeffer's Volatility Index (SVI) of 24% is at an annual low. Likewise, its Schaeffer's Volatility Scorecard (SVS) of 67 indicates Illumina stock has exceeded options traders' volatility expectations during the past year.

EW Options Trading at a Bargain

Edwards Lifesciences stock has also outperformed in 2017, up nearly 22% to sit at $114.05. The stock gapped higher in late April, thanks to solid earnings and guidance, but has struggled to take out former support in the $115-$116 area -- where EW stock was trading before a massive bear gap in October.

edwards lifesciences EW stock chart


An exodus of option bears could add fuel to Edwards' fire. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 1.52 is higher than 96% of all other readings from the past year. Meanwhile, the stock's Schaeffer's put/call open interest ratio (SOIR) is at an annual peak of 1.41, indicating near-term options traders have rarely been more put-heavy on EW stock.

Again, those looking for more June upside from EW shares can scoop up the stock's short-term options at a discount. The equity's SVI of 20% is lower than 99% of all other readings from the past 12 months, suggesting Edwards Lifesciences options are attractively priced, from a historical volatility standpoint. Plus, EW boasts an SVS of 77, suggesting the stock has made bigger moves than options traders had expected during the past year.
Published on May 30, 2017 at 2:56 PM
Updated on Jun 24, 2020 at 10:16 AM
  • Indexes and ETFs
  • Best and Worst Stocks
Signs are suggesting the stock market is entering a period of low volatility -- an ideal scenario for options buyers. While call buyers may want to drill down on this list of the 25 best stocks for June, put buyers may want to take a closer look at financial shares. Specifically, the Financial Select Sector SPDR Fund (XLF) is one of the worst-performing exchange-traded funds (ETFs) in the month of June, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. The average June XLF loss over the past 10 years is 3.4%, with the ETF positive just 20% of the time.

worst etfs to buy in june

XLF Has Struggled as the Trump Trade Loses Steam

XLF shares surged more than 46% from their June 27 post-Brexit low of $17.31 to their March 2 nine-year high of $25.30 -- a milestone that was inspired by a big rally in financial stocks on hopes the Trump administration would deregulate and cut taxes on the industry. However, the so-called Trump trade has lost steam in recent months.

And though XLF has repeatedly found a floor in the $23.00-$23.50 region -- home to its year-to-date breakeven mark and a 23.6% Fibonacci retracement of its recent rally -- the formerly supportive 50-day moving average appears to have switched roles to act as resistance. Today, XLF is trading down 0.7% at $23.44, as bank stocks struggle on Europe woes.

XLF Put Options Have Been Popular

XLF options traders have been growing increasingly skeptical in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the ETF's 10-day put/call volume ratio has jumped to 1.30 from 0.60 in the past two weeks. The current ratio ranks higher than 61% of all comparable readings taken in the past year, pointing to a slightly heavier-than-usual bearish bias among speculative players.

Echoing this put-heavy backdrop is XLF's front-month gamma-weighted Schaeffer's put/call open interest ratio of 2.39, which indicates near-the-money put open interest more than doubles call open interest among standard June options. The June 22 put is XLF's top open interest position, with 442,120 contracts outstanding.

XLF Short Sellers Have Been Jumping Ship

While this put-heavy strike has the potential to act as a magnet for XLF in the near term, short sellers have been abandoning their bearish positions of late -- meaning there's little in the way of sideline cash available to help fuel potential rallies. Short interest on XLF plunged nearly 16% in the two most recent reporting periods to 78 million shares, or 1.3 times the fund's average daily pace of trading.

XLF Options are Affordably Priced

Those wanting to bet on XLF's near-term trajectory -- one that includes an upcoming Fed meeting -- should strike while the iron's hot. The ETF's Schaeffer's Volatility Index (SVI) of 22% ranks lower than 88% of all comparable readings taken in the past year, meaning low volatility expectations are being priced into XLF's short-term options, a potential boon to premium buyers.
Published on Jun 2, 2017 at 12:58 PM
Updated on Jun 24, 2020 at 10:16 AM
  • Best and Worst Stocks
  • Technical Analysis
  • Quantitative Analysis
We recently outlined the worst stocks to own in June, per data from the past 10 years, and topping the list was red-hot drugmaker Regeneron Pharmaceuticals Inc (NASDAQ:REGN). Although REGN stock is currently flirting with annual-high territory, it could be in for a rough few weeks, if past is prologue. Below, we'll discuss why REGN traders may want to consider a short-term options hedge, and why fellow biotech stock Sarepta Therapeutics Inc (NASDAQ:SRPT) might be a better bullish play this month.

REGN Stock Has Been the Worst in June

Over the past decade, REGN has finished the month of June in the black just one time, according to recent data from Schaeffer's Senior Quantitative Analyst Rocky White. In fact, REGN has been the worst S&P 500 Index (SPX) stock to own in the month of June, averaging the steepest loss of 10.14%.

Regeneron stock could be due for a breather, too. The shares have surged 31% in 2017, and sport a 14-day Relative Strength Index (RSI) in overbought territory. Plus, REGN stock is now staring at a trendline connecting its higher highs since early 2016, as well as possible congestion in the $480-$490 area, which acted as support for the shares in 2015. At last check, Regeneron shares were 3.8% higher at $483.50, after peaking at an annual high of $484.99 earlier.

regeneron stock regn chart

REGN Options Are Attractive Right Now

Recent REGN options buyers have been much more bullish than usual, too. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open more than two Regeneron call options for every put during the past two weeks. The resulting 10-day call/put volume ratio of 2.12 is higher than 86% of all others from the past year. Should REGN stock run into a familiar roadblock, or should the shares react negatively to next week's shareholder meeting, an unwinding of optimism in the options pits could exacerbate the pullback.

However, REGN shareholders looking to hedge with short-term puts can do so at a relative discount. The stock's Schaeffer's Volatility Index (SVI) of 32% is lower than 78% of all other readings during the past year, suggesting Regeneron's short-term options are attractively priced right now, from a historical volatility standpoint.

SRPT Stock Testing Historically Bullish Moving Average

As alluded to earlier, Sarepta Therapeutics stock could be a more lucrative alternative to Regeneron in the short term, if recent history repeats. SRPT stock has been bouncing along its 320-day moving average, which has been a bullish signal in the past. According to data from White, after Sarepta stock's last five pullbacks to this trendline, the stock was higher one month later 80% of the time, averaging an enormous gain of 18.91%. However, in 2017, the stock's upside momentum has stalled several times in the $37-$39 region. At last check, SRPT stock was up 1.3% at $31.11 -- a roughly 50% discount to the stock's 14-year high of $63.73 in late September.

sarepta srpt stock chart



Options traders who'd like to roll the dice on another short-term bounce for Sarepta Therapeutics stock can scoop up the stock's options at a relative discount. Specifically, SRPT sports an SVI of 58% -- in just the 4th percentile of its annual range.

It should be noted that Sarepta Therapeutics will also host its annual shareholder meeting next week, and has been the topic of M&A chatter recently. For those not interested in SRPT shares this month, perhaps this list of the 25 best stocks to own in June will pique their curiosity.
Published on Jun 8, 2017 at 2:06 PM
Updated on Jun 24, 2020 at 10:16 AM
  • Indexes and ETFs
  • Quantitative Analysis
  • Best and Worst Stocks
Once the dust clears from today's testimony of fired FBI Director James Comey, as well as the snap election in the U.K., Wall Street will once again zero in on the Fed. The Federal Open Market Committee (FOMC) is expected to raise interest rates at its June meeting next week, and stock traders will no doubt nitpick Fed Chair Janet Yellen's post-meeting press conference for clues to the next rate hike. Against this backdrop, we took a look at how the S&P 500 Index (SPX) tends to react during Fed weeks, and outlined the best stocks and exchange-traded funds (ETFs) to own -- and which ones have attractive options right now.

S&P Slightly Underperforms During Fed Weeks

Going back to 2015, the SPX has averaged a 0.10% gain during Fed meeting weeks, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. Further, the S&P has ended Fed weeks higher 53% of the time. That's just slightly beneath the index's anytime weekly stats since 2015, with the SPX averaging a gain of 0.13%, with a positive rate of 55%.

spx sp 500 index stock market fed weeks


However, as Schaeffer's Senior V.P. of Research Todd Salamone recently observed, the SPX had trouble trading above its Fed rate-hike day close in the second half of March and throughout April. "This price behavior was similar to the price action following rate hikes in December 2015 and December 2016," he noted. "In fact, it was not until July 2016 that the SPX finally made a sustained move above the Dec. 16, 2015, FOMC day close of 2,073.07 -- although the mid-December 2016 rate-hike day closing level proved to be more of a month-long hesitation point until the inauguration of Donald Trump." 

25 Best Stocks to Own During Fed Weeks

Meanwhile, below are the 25 best stocks and ETFs to own during a Fed week, using historical data since 2015. Utilities stocks -- often seen as "defensive" stocks -- dominate the list, led by PPL Corp (NYSE:PPL). The shares of PPL boast the best win rate of any S&P member during Fed weeks, ending the week higher 84% of the time. Further, PPL stock has averaged an impressive gain of nearly 2% during these weeks -- the second-best on the list. The utility stock has been in rally mode since the U.S. presidential election, and notched a post-financial crisis high of $40.20 on Tuesday.

best stocks to own fed meeting weeks

Utilities, Gold & Silver Top Best ETFs to Own Next Week

As to the best ETFs to own during the week of a Fed meeting, it's no surprise to find the Utilities Select Sector SPDR Fund (XLU) near the top of the list. Shares of XLU have ended the week higher 68% of the time, going back to 2015, with an average weekly return of 0.89%. However, metal-based ETFs tend to perform even better, likely because tangible assets are often seen as "safe haven" investments and inflationary hedges.

The VanEck Vectors Gold Miners ETF (GDX), in fact, has fared the best of any exchange-traded fund during Fed weeks, hands-down. GDX has ended the week positive 68% of the time since 2015, with a stellar average return of 2.53%. The shares have surged  nearly 11% since their early May lows, and are on pace to end atop their 10-month moving average for the first time since October.

What's more, GDX's short-term options are a relative bargain right now, for traders expecting another burst higher. The fund's Schaeffer's Volatility Index (SVI) of 32% is higher than just 22% of all other readings from the past year, suggesting GDX's near-term options are attractively priced, from a historical volatility perspective. Further, GDX's Schaeffer's Volatility Scorecard (SVS) of 82 indicates the fund has exceeded option buyers' volatility expectations during the past year.

Likewise, the SPDR Gold Trust (GLD) is also near the top of the list, with a win rate of 68% and an average Fed-week gain of 0.91%. But it's the iShares Silver Trust (SLV) that takes the cake, as far as win rate. The silver-based fund has ended Fed weeks higher 79% of the time since 2015 -- in a class of its own -- with an average gain of 1.31%. Further, wannabe short-term call buyers can scoop up SLV options at a discount, as the ETF's SVI of 19% is lower than 90% of all other readings from the past 12 months, and SLV sports an SVS of 97 -- a major selling point for premium buyers.

best etfs sectors to buy during fed week


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