Shares of Wendy’s Co (NASDAQ:WEN) are down 2.3% this morning, last seen at $22.42. The fast-food chain forecast a weaker-than-expected full-year outlook, but revealed fourth-quarter earnings that were in-line with estimates. Meanwhile, Wendy’s also reported bigger-than-expected capital costs on for the year, as they roll out a new breakfast menu in the hopes to battle competitors McDonald’s (MCD) and Dunkin’ Brands (DNKN).

The stock sports a healthy 32% year-over-year lead, much of which is thanks to long-term support at the 100-day moving average. In fact, the equity just yesterday touched a record high of $24.03. Analysts have yet to chime in, but heading into today were divided on their outlook for WEN, as eight recommend a “buy,” and 11 a tepid “hold.”

In the options pits, data at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows WEN with a 50-day call/put ratio of 11.76. This ratio is in the 99th percentile of its annual range, meaning calls have been preferred over puts during the past 10 weeks.

Just one week off the buyout that led to its best day since 2009, E-Trade Financial Corp (NASDAQ:ETFC) is trading modestly higher, up 0.6% at $48.81, despite receiving a downgrade to "market perform" from "outperform" at Raymond James. Yesterday ETFC marked its third-straight loss on the charts, but remains well above its recently supportive 120-day moving average. Year-to-date, the equity has added 7%.

Heading into today analyst sentiment was mixed. Six covering firms sport a "hold" or "strong sell" rating, while the remaining five carry a "buy" or "strong buy" rating.

Short interest on the finance name fell 12.6% during the most recent reporting period, but still accounts for less than 2% of the stock's total available float. At ETFC's average pace of daily trading, it would take just over one day for shorts to buy back their bearish bets.

Digging a little deeper, a hefty presence of calls is evident in the options pits. This is per E-Trade stock's 10-day call/put volume ratio of 3.74 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio ranks in the 81st annual percentile, meaning calls have been purchased over puts at a faster-than-usual clip of late.

 

A big earnings loser today is Papa John’s International Inc. (NASDAQ: PZZA). The pizza giant reported adjusted quarterly earnings of 37 cents per share, which is 4 cents a share above estimates and 22 cents higher than the same quarter last year. Continuing to exceed expectations, the company's revenue came in at $417.41 million, shooting by the estimated $405.32 million. However, due to the coronavirus outbreak, Papa John's adjusted its 2020 forecast to an area below Wall Street estimates.

All of that has Papa John’s stock down 9.4% to trade at $60.87 this morning, trading at its lowest level of 2020 thus far. Last Thursday, Feb. 20th, PZZA hit a two-year high of $70.19, continuing on its steadily bullish upswing. Even with today's drop, the stock is up 46% in the last 12 months. Today’s pullback has also found support at the shares’ 100-day moving average.

In the options pits, data at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows PZZA with a 50-day call/put volume ratio of 3.49. This a ratio sits in the 99th percentile of its annual range, suggesting the rate of call buying is rare at the moment.

It comes as no surprise that analysts are betting bullishly. Out of 11 analysts in coverage, none have “sell” or “strong sell” ratings. Echoing this sentiment in the options pits, PZZA’s put/call open interest ratio (SOIR) sits at 0.31, which ranks in the 2^nd percentile of its annual range. In other words, short-term options players have rarely been more call-heavy in the last 12 months.

The shares of Walt Disney Co (NYSE:DIS) are sitting out the Dow's furious rally from this week's steep drop. DIS is the worst Dow stock today, down 1.4% to trade at $126.44, after it was announced CEO Bob Iger will be stepping down. Although he will remain company chairman, Bob Chapek, prior head of Disney Parks, will succeed Iger. Cowen and Company called the timing of the decision "curious," but noted that Iger's presence will help ease the transition. 

Disney stock is headed toward its fifth straight loss, and is trading at its lowest point since a mid-April bull gap. Since a Nov. 26 record high of $153.41, the shares have shed almost 18%, with their 50-day moving average emerging as resistance in 2020. 

In the options pits, Disney stock's Schaeffer's open interest ratio (SOIR) of 0.62, which ranks in the 85th percentile of its annual range. In other words, short-term options players have rarely been more put-heavy during the last 12 months. 

It's more of the same today. In just the first hour of trading, 23,000 puts have changed hands, triple the average intraday amount and volume pacing for the 99th percentile of its annual range. Leading the charge today is March 125 put, while new positions are being opened at the weekly 2/28 126-strike put.

Stocks continue to pull back with uncertainty surrounding the coronavirus. A pullback may not be a big surprise to those who subscribe to the Dr. Copper theory. Copper is a popular metal in a variety of areas of the economy. Investopedia says “… from homes and factories to electronics and power generation and transmission – demand for copper is often viewed as a reliable leading indicator of economic health.” For that reason, copper is said to have a PHD in economics and hence, the title Dr. Copper.

The chart below shows copper is down big already year-to-date. I’ve learned that narratives, such as the Dr. Copper narrative, often do not stand up well to scrutiny. This week I look at a history of copper pullbacks to see if they have tended to lead to stock market losses going forward.

Copper Falls Early in the Year

We have daily copper spot prices going back to 1971. I looked back to then and found times that copper was down at least 3% at this point in the year. There were 10 instances when this happened. The table below summarizes how the S&P 500 (SPX) performed after those occurrences. The second table below shows typical index returns for comparison. For that table I went back to 1982, the year of the first signal.

This does not look to be any sort of sell signal for stocks. The returns over the next one, three and six months are in line with typical market returns. When you look at the returns for the rest of the year, stocks have been rather impressive when copper suffers a big drop early in the year.

Here are the individual returns when copper is down 3% or more at this point in the year. The last time this happened was 2015. Stocks struggled after that signal for the rest of the year. The returns before that were generally bullish.

Copper Falls Stocks at Highs

Copper prices fell before the recent pullback. I thought it was interesting that the S&P 500 was hitting an all-time high while copper had made a significant pullback. Here’s another way I looked for evidence that copper would affect stocks going forward. I looked at times when the S&P 500 was hitting a record high while copper was at least 10% off its high over the past month.

This actually signaled early in the month on Feb. 5. There were six other times stocks resiliently hit all-time highs during a sharp pullback in copper prices. There aren’t many data points to draw strong conclusions but again, it doesn’t suggest there’s an increased chance of a pullback. After the previous six occurrences, the S&P 500 tended to perform as it typically does.

Here are the individual returns after these signals. You must go all the way back to 2007 for the last occurrence. That was about six months away from the major market top just before the financial crisis. Before that, however, it happened a few times in the mid-1990’s, which were very good times for stocks.

Online travel specialist Expedia Group Inc (NASDAQ:EXPE) is gapping lower today on news that the company plans on cutting 3,000 jobs -- 12% of its workforce -- in an effort to streamline its business. This comes right on the heels of the company's decision to forgo a full-year forecast amid the growing coronavirus uncertainty. EXPE is now trading back below recent support at its 60-day moving average in response, and completely erased its Feb. 14 bull gap, down 3.4% at $108.50 at last check. 

Options bears have been quick to pick up EXPE stock today. So far, 12,000 puts have crossed the tape, two times the intraday average and nearly double the number of calls. Most popular is the April 105 put, where positions are being opened. On the call side, the September 120 contract is seeing quite a bit of activity, as well. 

Typically, bulls rule the roost, as evidenced by EXPE's 50-day call/put volume ratio of 1.84 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 71% of all other readings from the past year too, suggesting that calls are being being picked up at a slightly quicker clip than usual. 

Meanwhile, short interest has been rapidly unwinding, down 35.1% in the last reporting period. Now, the 6.54 million shares sold short represents 5.4% of the stock's available float, or roughly two days at its average pace of trading. 

Healthcare stock DaVita Inc (NYSE:DVA) has recently pulled back after hitting record highs and reporting strong quarterly results. On a longer-term basis, the shares seem to have broken out of a series of lower highs in place since 2015, hinting that more upside is possible going forward. There’s plenty of bearish bias that could unwind around DVA, too, meaning there’s still plenty of fuel in the tank from a contrarian perspective.

For starters, the majority of analysts still have tepid “hold” ratings on DVA, leaving the door open for bullish attention, especially given the stock’s recent push to fresh highs and strong showing in the earnings confessional. A round of upgrades could bring more buyers to DaVita’s table.

What’s more, DVA has a short-interest ratio of 5.00, showing a week’s worth of buying power is in the hands of short sellers, based on average trading volumes. Short interest dropped 12.1% in the last reporting period, however, so short-covering tailwinds could also help the shares keep rising.

Near-term premiums look attractive at the moment, based on the Schaeffer’s Volatility Index (SVI) of 24%, ranking in the 7th annual percentile. Our recommended call has a leverage ratio of 6.2, and will double in value on a 16% gain in the underlying security.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this DVA commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

The shares of Mastercard Inc (NYSE:MA) are being dragged even further down the charts this morning following news of CEO Ajay Banga's resignation, at the start of 2021. Banga will be replaced by Chief Product Officer Michael Miebach. Also pressuring shares this morning is an updated current-quarter forecast from the company, predicting that its first-quarter revenue would likely take a 2% to 3% hit, should the coronavirus continue its wild spread through the first quarter. At last check, MA is down 1.5% to trade at $319.94.

This comes right on the heels of yesterday's massive 4.4% plummet from Mastercard's peak atop the $340 region. In fact, MA just notched a record high of $347.25 last week. Despite the dip, the equity is still keeping its head above its year-to-date breakeven, as well as its 50-day moving average, which acted as support for the equity during yesterday's trading. 

Analysts are overwhelmingly optimistic on the stock still, with 24 of the 26 in coverage giving MA a "strong buy" or better rating. Meanwhile, the consensus 12-month price target price of $359.65 is a 10.8% premium to last night's close. 

Options players have tended towards bullish positions as well. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) MA sports a 10-day call/put volume ratio of 1.72. This ratio sits higher than 76% of all other readings from the last year, suggesting long calls have been bought over long puts at a quicker-than-usual clip. 

Boston-based General Electric Company (NYSE:GE) is enjoying a 1% lift this morning, last seen just shy of $12 after sharing its annual report. The report stated the conglomerate employed a more consolidated 205,000 people, 70,000 of which were U.S.-based in 2019. This compares to 2018's count of 283,000. Yesterday GE was one of the many in the broad-market selloff, plunging 3.2%, or all the way to its 80-day moving average in its session lows. Today's positive shift has the security up 14% year-over-year. 

In the options pits, calls have been preferred over puts. This is per the stock's 10-day call/put volume ratio of 4.93 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ranks in the 96th annual percentile, meaning nearly five calls have been purchased for every put during the past two weeks of trading.

Echoing this sentiment is General Electric stock's Schaeffer's open interest ratio (SOIR) of 0.87, which ranks in the 2nd percentile of its annual range. In other words, short-term options players have rarely been more call-heavy during the last 12 months. 

The shares of Toll Brothers Inc (NYSE:TOL) are down 0.1% to trade at $46.90 this morning, despite a bull note from SunTrust Robinson. The brokerage firm hiked its price target to $47 from $37, in line with the homebuilding stock's closing perch yesterday of $46.98.

Homebuilding stocks like Toll Brothers were one of the strongest groups in 2019, and that has carried over into 2020. TOL is up 19% year-to-date, and remains a chip-shot from its Feb. 11 annual high of $49.31. And while the shares dropped yesterday with the broad market sell-off, the damage was contained by their ascending 20-day moving average.

There's ample room aboard the bullish bandwagon. There are 11 brokerages covering TOL, and nine rate it a "hold" or "strong sell." Plus, the consensus 12-month price target of $43.71 is a 7% discount to last night's closing perch. More price-target hikes or an upgrade could keep the wind at the security's back. 

A short squeeze could also fuel additional gains. Short interest increased by 27.1% in the two most recent reporting periods to 8.45 million shares, the most since October 2018. This takes up a healthy 7% of TOL's total available float, and 4.5 days' worth of buying power, at the stock's average pace of trading.

Moderna Inc. (NASDAQ:MRNA) shares are surging 11.21% to trade at $20.54 this morning, as the company delivers its experimental coronavirus vaccine to the United States for human testing. Given the fact that the infection appears to be leading the charge in the sharp stock market drop, the vaccine is a welcome response to the spreading threat.

Moderna stock has relied on its 200-day moving average as support in 2020. On a roller-coaster the last twelve months, MRNA has jumped following any recent vaccine developments, starting with the confirmation of the vaccine development announced late January. On Feb. 7, the shares jumped 16.9% to $23.24 in response to Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases (NIAID) saying that human clinical trials could start by the end of April.

After the recent news, analysts have been bullish, with six of the seven considering “strong buy," and zero "sells" to be found. In the options pits, Moderna sports a 50-day call/put volume ratio of 10.94 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits in the 96th percentile of its annual range, suggesting it is much more bullish than usual.

Shares of retailer Home Depot Inc (NYSE:HD) are up 1.8% this morning, last seen at $244.34, following the company's upbeat quarterly report. The Lowe's (LOW) rival reported earnings of $2.28 per share for the fourth quarter, higher than the anticipated $2.10 per share. The home improvement giant also reported better-than-expected sales of $25.78 billion. Further, based on current information, the company said it will be difficult to tell whether future earnings will be impacted by the coronavirus outbreak.

After recording a record high of $247.36 just last week, shares of HD are continuing to expand on their rebound, with the exception of yesterday's broad-market setback. In fact, year-over-year the equity remains up 28%.

In the options pits, data at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows HD with a 50-day call/put volume ratio of 2.48. This a ratio sits higher than 96% of readings from the past year, and means that more than two calls have been picked up for every put in the last 50 days of trading.

Analyst coverage for Home Depot looked optimistic heading into today. Specifically, 11 of the 19 covering firms sport a "buy" or "strong buy" position, while eight recommend a "hold," with not a single "sell" is in sight.