Cardinal Health Inc (NYSE:CAH) will take its turn in the earnings confessional before the open on Monday. Ahead of the event, the pharmaceuticals distributor just flashed a bearish signal which could spell trouble in the near term.

For starters, Cardinal Health's history of post-earnings reactions has been less than promising. The security has averaged a 5.2% single-session post-earnings move over the past eight quarters -- where three of the past four have been negative. Following the most recent release in May, CAH stock dropped a whopping 21.4% the day after reporting.

At last check, Cardinal Health stock was up 1.8% to trade at $50.94. The healthcare name has shed 27% year-over-year, carving out a channel of lower lows thanks to four bear gaps in 2018. The equity is now within a chip-shot of its 40-day moving average after spending most of 2018 below the trendline. According to Schaeffer's Senior Quantitative Analyst Rocky White, in the 12 most recent times CAH has come within one standard deviation of this trendline after a lengthy stay below it, the security has gone on to average a one-month loss of 2.55%, with 64% of those returns negative.

Should the drug retailer extend its recent slide, there is ample room aboard the bearish bandwagon. Although short interest increased by 30% in the two most recent reporting periods, the 9.72 million shares sold short represents a meager 3.7% of CAH's total available float, or only 2.8 times the average daily pace of trading.  

In the options pits, the attitude leans toward calls. The stock's 10-day call/put volume ratio of 1.37 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 80th percentile of its annual range. This indicates a healthier-than-usual appetite for long calls over puts in the past two weeks. An unwinding of these bullish bets could push CAH lower.

Traders, whether bullish or bearish, may want to consider Cardinal Health options, since it's been a good target for premium buyers during the past year. That's according to its Schaeffer's Volatility Scorecard (SVS) of 78 out of 100, which shows it's tended to make much bigger-than-expected moves on the charts compared to what the options market was expecting.

Oil prices are on pace for a fifth straight weekly loss. However, two energy stocks could be ready to rally, if history is any indicator: W&T Offshore, Inc. (NYSE:WTI) and WPX Energy Inc (NYSE:WPX). Both WTI and WPX stocks recently pulled back to key levels on the charts, suggesting it may be time to buy the dip.

Analysts Have Yet to Notice W&T Offshore

W&T stock has nearly quadrupled in value over the past year, rallying more than 278% since trading in the low single digits. The equity tapped a three-year high of $9.12 on July 23, but subsequently took a breather. Today, WTI shares are up 0.8% to trade at $7.18, as traders continue to applaud the company's stronger-than-expected quarterly earnings, released earlier this week.

In light of the pullback from new highs, WTI is now within one standard deviation of its 80-day moving average, after a lengthy stretch above this trendline. There have been six similar pullbacks for WTI in the past, after which the stock went on to average a one-month gain of 15.5%, per data from Schaeffer's Senior Quantitative Analyst Rocky White.

Despite the equity's impressive rally in the past year, analysts remain wary of the penny stock. Just one out of four brokerage firms deems WTI worthy of a "buy" or better rating. Should the shares once again bounce off their 80-day, a round of positive analyst initiations or upgrades could lure more buyers to the table.

Short Squeeze Could Propel WPX to New Heights

WPX Energy stock has enjoyed a slow burn higher over the past year, advancing more than 90%. The security notched its highest close since 2014 yesterday thanks to a well-received earnings report, but has given back 4.3% to trade at $18.69 today.

WPX is also back within one standard deviation of its 80-day moving average, after a notable stint north of the trendline. There have been eight similar dips for the energy stock in the past, and WPX went on to rally 5.48%, on average, in the subsequent week, and was higher 88% of the time. Looking a month out, the shares also boast a win rate of 88%, with an average gain of nearly 8.5%.

Should the equity once again rally off this trendline, a short squeeze could add fuel to WPX's fire. Short interest accounts for more than 26 million shares, representing nearly a week's worth of pent-up buying demand, at the stock's average pace of trading.

"For the third time in five months, a trade war topped the ranking of tail risks in Bank of America Merrill Lynch's fund-manager survey. Some economists have forecast that a full-blown trade war with China and other trading partners could send the S&P 500 down as much as 20%."
-- Business Insider [subscription required], July 23, 2018

"Markets in Asia plunged overnight, wiping more than $220 billion off the region's stocks as a fresh round of trade war fears sent investors seeking cover. The move came after the White House confirmed that President Donald Trump asked U.S. Trade Representative Robert Lighthizer to consider hiking duties to 25 percent as early as next month."
-- Bloomberg, August 2, 2018

"China Threatens to Impose Tariffs on $60 Billion of U.S. Products"
-- The Wall Street Journal [subscription required], August 3, 2018

On CNBC's Squawk Box last Monday morning, I was asked by co-anchor Michelle Caruso-Cabrera if I thought the Fed was the biggest risk to the market, as a guest expressed earlier that morning. I agreed with that assessment, basing my opinion on quantified evidence on how the equity market has behaved in the short term in the immediate aftermath of Federal Open Market Committee (FOMC) decisions since the current tightening cycle began in 2015.

Obviously, my opinion contrasts with that of fund managers, who cite a trade war as the No. 1 risk to the market and economy. Perhaps their opinion is influenced by the constant stream of media headlines and discussions about the negative implications of a trade war with our trading partners.

Judging by the action last week, I stand by opinion that it's all about the Fed, as the U.S. equity market rallied -- even amid fresh headlines about bigger tariffs on Chinese goods and China's retaliatory moves. The equity market action last week suggests to me that: 1) the market is discounting that a trade war will not occur; or 2) a trade war will not have the negative implications for the market and economy that many fear.

While individual companies and sectors of our economy may feel the impact of trade wars and tariffs -- either positively or negatively -- a takeaway from last week and the past several months is that a full-blown trade war is much more a risk to the Chinese economy and its stock market relative to the risk that it poses to the U.S. market. The Shanghai Composite Index (SSEC - 2,740.44), for example, did not fare so well last week amid the trade headlines, dropping 4.6%. Moreover, this index is down 23% from its January closing high, while the S&P 500 Index (SPX - 2,840.35) is only 1% below its 2018 high.

"In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1-3/4 to 2 percent. The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation."
-- Federal Open Market Committee (FOMC) statement, August 1, 2018

"The arrival of a new trading month on Wednesday, Aug. 1, also brings a big event for investors from a macro perspective -- the Federal Open Market Committee (FOMC) policy decision... equities... have performed better in the immediate aftermath of a decision by the FOMC to hold rates steady versus a rate hike."
-- Monday Morning Outlook, July 30, 2018

The trade headlines did create intraday noise last week, with the SPX testing the round 2,800 century mark during a Thursday morning pullback. But ultimately, market participants again applauded the FOMC's decision to hold rates steady, with the SPX ending the week above its pre-FOMC decision day close of 2,816.

Per the table below, displayed in last week's commentary, the SPDR S&P 500 ETF Trust's (SPY - 283.60) best days have occurred in the month following a decision by the FOMC to hold rates steady as opposed to raising rates.

The probability of the market being higher one month after a decision to hold rises slightly to 83% when retail investors' expectations are tempered, as they are now. For example, the American Association of Individual Investors (AAII) survey for the week ended Aug. 1 showed slightly more bears than bulls. In other words, retail investors in this survey are net bearish ahead of the most lucrative time for bulls following Fed decisions since December 2015. And as displayed last week, when investor expectations are neutral-to-cautious, as they are now, the expected SPY advance rises to 2.2% from 1.4%.

It isn't only the retail investor that is cautious. In late July, strategists from Goldman Sachs, Sanford Bernstein, and Morgan Stanley recommended that investors be on guard for a serious pullback. Goldman is worried about a liquidity-fueled sell-off, as they still don't see spreads in S&P 500 E-mini futures as "back to normal" following the extreme illiquidity that preceded the February correction. Morgan Stanley is warning that a correction worse than February is looming, citing the loss of leadership in technology and cyclical stocks recently and the inability of value stocks to rally on strong earnings reports. Strategists from Sanford Bernstein summed up the price action concerns about value and cyclical stocks as a symptom of rising correlations between all investment factors, which ratchets up systemic risk for active investors.

One scenario is that this caution represents buying power in the immediate days ahead, especially with the SPX trading around multi-month highs on the heels of the Fed's "pause" last week. Another potential scenario is the strategists being correct about the risks, but early on the timing. With an expected rate hike at the September FOMC meeting, which will likely coincide with a ramp-up in midterm election uncertainty, perhaps their case for a pullback becomes stronger roughly six weeks from now.

Speaking of caution, the 10-day equity-only, buy-to-open put/call volume ratio rose again last week, and is currently above 0.60. The last time this ratio was above 0.60 was in the spring, which preceded an impressive rally.

$QQQ $180 is 50 percent above the 2000 peak at $120... Resistance since mid-July.

— Todd Salamone (@toddsalamone) August 3, 2018

Amid the potential short-term tailwinds from the Fed's hold last week and a sentiment backdrop that could supply buying power, there is resistance immediately overhead on multiple equity benchmarks that could slow or hinder a rally.

Resistance on the Invesco QQQ Trust (QQQ - 180.08), the large-cap technology exchange-traded fund (ETF), is at $180, which is 50% above its 2000 peak. The SPX could incur resistance at its January closing high of 2,872 -- which I mentioned above is only about 1% above its Friday close.

Meanwhile, smaller-cap indexes, such as the Russell 2000 Index (RUT - 1,673.37) and S&P MidCap 400 Index (MID - 2,000.04), continue to struggle with round-number resistance at 1,700 and the 2,000 millennium mark, respectively. In fact, per the chart below, the MID has been fighting the 2,000 level since its first test of this area in January. And with respect to the RUT, the 1,690 area is a round 10% above 2017's close, which presents another short-term technical challenge for RUT bulls.

Continue reading:

• Indicator of the Week: The Stocks to Target After the Nasdaq Sell-Off
  
• The Week Ahead: Snap, Disney Earnings to Headline Busy Week
  

3-D printer maker 3D Systems Corporation (NYSE:DDD) will report second-quarter earnings after the close this Tuesday, Aug. 7. The shares have been on fire in 2018 -- and are now testing a key level on the charts -- yet most of Wall Street remains skeptical of DDD. 

3D Systems shares are up 2.3% to trade at $13.15 today. After touching an annual high of $15.94 on July 13, DDD stock pulled back to test the support of the $12 region, which represents a 50% Fibonacci retracement of the equity's rally from its November low of $7.92 to the aforementioned peak. This area is also home to the security's uptrending 160-day moving average. Now, DDD is attempting to establish a floor in the $13 neighborhood -- a 38.2% Fibonacci retracement of the same rally, and representing a 50% gain year-to-date.

On the earnings front, DDD stock last week got a halo lift from sector peer Stratasys (SSYS), which reported stronger-than-expected quarterly figures. Looking back eight quarters, 3D Systems shares have averaged a one-day post-earnings swing of 11.2%, regardless of direction. This time around, the options market is pricing in a bigger 16.6% swing for DDD stock.

While bought calls have outnumbered puts on an absolute basis in the past two weeks, 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 0.43 is in the 80th percentile of its annual range. This suggests traders have ramped up their DDD put buying relative to call buying ahead of earnings.

Plus, although the stock has rallied more than 30% in the past three months, just one of eight analysts maintains a "buy" rating on DDD. Likewise, the average 12-month price target of $10 represents a discount of 24% to the equity's current perch.

And while short interest has dropped in recent reporting periods, these bearish bets still account for 29% of the security's total available float. At 3D Systems stock's average pace of trading, it would take more than four weeks to repurchase these pessimistic positions.

In conclusion, should the company follow the lead of Stratasys and report an earnings beat tomorrow night, an exodus of bears could bode well for DDD shares. More specifically, the stock could benefit from a reversal of sentiment in the options pits, a flood of upbeat analyst attention, or a healthy short squeeze.

Social media name Snap Inc (NYSE:SNAP) is set to report second-quarter earnings after the market closes this Tuesday, Aug. 7. The stock has a history of making big moves in the wake of its quarterly reports, with Trade-Alert showing an average single-day price swing of 23.9%, regardless of direction, over the past five quarters. This time around, the options market is pricing in a steeper-than-normal 26.3% post-earnings move for SNAP.

In fact, volatility expectations for SNAP are somewhat heightened overall. The equity's 30-day at-the-money implied volatility (IV) of 85.7% registers in the 96th percentile of its annual range, as short-term SNAP options have rarely priced in a steeper IV premium.

And for the most part, options players have been favoring SNAP put options over calls. During the past 10 days, speculators on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 1.10 puts for every call on Snap stock. This ratio arrives in the 96th percentile of its annual range, as traders have rarely purchased puts over calls at a faster clip.

Likewise, Schaeffer's put/call open interest ratio (SOIR) of 1.74 outranks 97% of comparable readings from the past year. This elevated SOIR reveals that puts outnumber calls by a wider-than-usual margin among options set to expire within three months.

Zeroing in on the weekly 8/10 options series that encompasses tomorrow's earnings report, the in-the-money 14-strike put has logged the biggest increase to open interest over the past two weeks, with 10,552 contracts added over this time frame.

On closer inspection, it looks as though many of these weekly 8/10 14-strike puts were bought to open as part of a long put spread strategy on the Snapchat parent. Over the course of last Thursday and Friday's sessions, blocks of these overhead puts traded at the ask price around the same time that smaller blocks (roughly half the size) traded near the bid price on the weekly 8/10 10.50-strike put.

By purchasing the 14-strike puts on SNAP and simultaneously selling the 10.50-strike puts, traders can capitalize on a downside move while also reducing their initial cost of entry -- a balanced approach that can help to offset some of the impact of that ramped-up volatility premium ahead of earnings. Notably, the 10.50 strike corresponds with the site of SNAP's current record lows, set as recently as May.

From a technical perspective, SNAP is fractionally higher today to trade at $12.81. The shares have dropped more than 12% this year, and are poised directly below their 30-day moving average -- a short-term trendline that has alternately provided both support and resistance this year. Based on the equity's current perch, an "average" post-earnings swing of 23.9% could carry SNAP as high as $15.87 by Wednesday's close -- or as far south as $9.75, which would represent new all-time low territory.

There's been plenty of buzz lately about Tesla short sellers -- but elsewhere in the auto sector, drivetrain specialist Dana Inc (NYSE:DAN) is the stock we're watching for an upcoming downside move. According to data analyzed by Schaeffer's Senior Quantitative Analyst Rocky White, DAN just bumped into a historically significant moving average that tends to send the stock reeling.

Specifically, DAN is trading within one standard deviation of its descending 40-day moving average, after having spent nearly all of the last six months pinned below this trendline. Looking back over the last three years, says White, this is the sixth time Dana stock has risen to test its 40-day moving average after a prolonged stretch beneath it.

Following the previous such signals, DAN was lower five days later 100% of the time, with the average return for that time frame weighing in at a loss of 6.3%. And one month after a signal, the stock was negative 80% of the time, with a loss of 6.7% for the average return.

Checking out the stock's sentiment backdrop, there's reason to believe that DAN's latest advance on its 40-day moving average might yield similarly bearish results in the short term. Short interest on the equity is hovering near nine-year lows, and currently accounts for only 1.6% of DAN's float. However, a 3.8% rise in short interest during the most recent reporting period indicates shorts are moving back in -- and a continued increase in shorting activity could create steady selling pressure.

Meanwhile, with Dana's second-quarter earnings report behind us, short-term implied volatility (IV) levels on the stock's options have come back down to earth. Schaeffer's Volatility Index (SVI) of 28% arrives in the 21st annual percentile, as front-month options on DAN have priced in lower volatility expectations just 21% of the time in the past year. In other words, prospective put buyers can pick up short-term DAN options for relatively affordable prices, from a volatility perspective.

In fact, the options market seems to be pricing DAN puts to move. Trade-Alert notes the 30-day implied volatility (IV) skew of 8.2% ranks in the 20th annual percentile, which means the stock's put options are pricing in an unusually narrow volatility premium relative to their call counterparts. With put premiums relatively low, traders can benefit from enhanced leverage on bearish DAN option plays right now.

Walt Disney Co (NYSE:DIS) stock is up 2% at $116.42 in afternoon trading, and just off a two-year high of $116.84, as investors await the media powerhouse's impending earnings report, which is slated for after the close tomorrow, Aug. 7. Below we will take a look at what the options market is pricing in for Disney after earnings, and how the stock has been faring on the charts following Comcast's (CMCSA) bid withdrawal for Twenty-First Century Fox (FOXA) assets.

Disney stock has been on an uptrend since early May, a time that coincides with the 30-day moving average transitioning from a ceiling of resistance to a line of support for the shares. DIS has picked up 10% in just the past month, and is set to mark its highest close since November 2015.

Digging into the blue chip's earnings history, DIS has closed flat or lower the day after the company reports in four of the last eight quarters, including a 2.2% decline in May 2017. Looking back eight quarters, the shares have moved 1.9% the day after earnings, on average, regardless of direction. This time around, however, the options market is pricing in a much larger-than-usual 6.2% move for Wednesday's trading.

Switching gears, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), DIS options traders have been leaning bearishly ahead of the company's highly anticipated report. Disney stock's 10-day put/call ratio of 1.09 stands in the 71st percentile of its annual range. In other words, puts have been bought over calls at a faster-than-usual clip.

Analyst sentiment has also been pessimistic, with nine of the 13 firms in coverage on DIS sporting a tepid "hold" recommendation. Further, the stock's average 12-month price target of $117.57 is a discount to current trading levels. Should Disney surprise to the upside after earnings, an exodus of option bears or a wave of upbeat analyst attention could propel the blue chip even higher.

CVS Health Corp (NYSE:CVS) stock is 0.8% higher at $65.85 in today's trading, as investors gear up for the drugstore giant's second-quarter earnings report, scheduled for before the market opens, tomorrow, Aug. 8. Below, we will take a look at how CVS has been faring on the charts, and what the options market is pricing in for the stock's post-earnings moves.

Starting with technicals, CVS Health stock has been on a downtrend since hitting a year-to-date peak in late January, and more recently has been stuck in a series lower highs. More recently, losses have been limited by a floor of support found at the $63 mark, and today's breakout attempt has been capped by the 120-day moving average -- a trendline that has acted as a ceiling of resistance for the shares in the past.

Looking toward earnings, CVS has closed lower the day after the company reports in six of the last eight quarters, including the last five in a row. Looking back eight quarters, the shares have moved 4.1% the day after earnings, on average, regardless of direction. This time around, the options market is pricing in a slightly larger-than-usual 6% move for tomorrow's trading.

Options traders have been leaning bullish on the drugstore chain ahead of earnings. This is per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), showing CVS Health stock with a 10-day call/put volume ratio of 2.52, ranking in the 77th percentile of its annual range. This shows that during the past two weeks of trading, calls have been bought over puts at a faster-than-usual clip.

Analysts are echoing this optimistic sentiment toward the security. Of the 15 brokerage firms covering the stock, 12 sport "buy" or "strong buy" recommendations. Plus, the stock's average 12-month price target comes in at a more than 30% premium to current levels.

Lastly, short interest on CVS Health rose 7% during the most recent reporting period, and now represents nearly 5% of the stock's total available float. At the average daily trading volume, it would take well over a week for shorts to cover their bearish bets.

This week we'll do a quick sector analysis using our contrarian philosophy. For those unfamiliar with our contrarian approach, we look for stocks that have performed well, but are despised by investors. That pessimism is an indicator of sideline money. As a stock outperforms, it gets harder and harder for those bears to resist. As they capitulate, that sideline money turns into buying power, pushing the stock higher. Conversely, we’re bearish on stocks that have underperformed yet are loved by investors. 

The Most Bullish Sectors

We run numbers on about 2,300 stocks broken down into about 40 sectors. I created a sector ranking system that considers price action of stocks within a sector, and also the sentiment on those stocks. The price action piece of the rating looks back one year and takes into account the average return of the stocks and the percentage of them that have beaten the S&P 500 Index. The sentiment part of the score considers broker buy/sell recommendations from Zack's Investment Research and short interest.

The table below shows the top-rated sectors using the criteria explained above. Looking at those sectors, it seems there’s little brokerage confidence in consumers. A lot of the sectors seem to rely on discretionary spending, such as personal goods, leisure goods, retailers, travel & leisure, etc.

The table below shows the best stocks year-to-date in the personal goods sector, the top-rated sector above. All ten of these stocks have returned at least 20% for the year. Only two of them, however, have more than half of the analysts in coverage rating them a buy. This could be an indicator that pessimism remains on the stock and, therefore, ample sideline cash exists.

The Most Bearishly Ranked Sectors

Here are the 10 worst sectors based on my ranking system. The mining sector struggles are linked to gold and other commodity prices. There are only nine stocks in the beverages sector and the mobile telecom sector (the average return in the mobile telecom sector is boosted by one stock, Intelsat SA (I), which has returned over 500% year-to-date). To me, the auto sector was the most interesting part of the chart below.

Here are the worst stocks, year-to-date, from the automobile & parts sector. All of these stocks are negative on the year. Some of them have very bearish sentiment already. The two that stand out as having done poorly but most analysts still recommend buying are LKQ Corporation (LKQ) and General Motors (GM). Downgrades on these stocks could pressure their shares even lower.  

Cloud storage specialist Dropbox Inc (NASDAQ:DBX) is about to release earnings for the second time since going public in March, with the company set to report after the close tomorrow, Aug. 9. The first time around, DBX shares dipped 2.2% the day after earnings, even though the company topped estimates. Going by options data, Wall Street is expecting a much more explosive move this time, with implied volatility data pricing in a 15.2% swing for Friday's session.

A quick check at the numbers on the equity from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows that put buying has outpaced call buying during the past 10 days. During this time frame, the October 30 put saw the largest increase in open interest, with heavy buy-to-open activity confirmed. To be even more recent, the September 27 put led the way in the past five sessions, and traders were mostly buying to open positions here, as well.

For the most part, DBX shares have traded in a tight range since their IPO, save their dramatic mid-June rise to $43.50 -- which, for what it's worth, coincided with massive gains in the cloud sector as a whole. The stock also recently dipped below the $27 mark, though analysts labeled this a buying opportunity. Dropbox was last quoted at $30.85, just above its 20-day moving average.

Auto stocks are in focus today after China levied a 25% retaliatory tariff on $16 billion of U.S. goods, most notably crude oil and cars. In addition to sector peer Dana Inc (DAN), both LKQ Corporation (NASDAQ:LKQ) and General Motors Company (NYSE:GM) could struggle in the coming months.

LKQ Rally Appears To Have Lost Steam

At last check, LKQ Corporation stock was down 1.1% to trade at $34.06. The auto parts maker has rallied 13% since consolidating near the $30 level in late April, but has not been able to fill the entirety of that earnings-induced bear gap. Overall, LKQ is staring at a 16% deficit for 2018. 

To make matters worse, LKQ found itself on a list compiled by Schaeffer's Senior Quantitative Analyst Rocky White containing stocks with the worst 2018 returns, but have yet to receive proper bearish analyst sentiment. More specifically, of the 12 brokerages covering LKQ, 11 still rate it a "buy" or "strong buy," with zero "sells" on the books. Should LKQ keep struggling, it may prompt these analysts to re-think their bullish stance.

Options traders have been almost exclusively targeting LKQ calls lately. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows 1,797 calls bought to open in the past 10 days, compared to just 13 puts. The resultant call/put volume ratio ranks in the 91st percentile of its annual range, indicating calls have been bought over puts at a faster-than-usual clip during the past two weeks.

General Motors Stock Held In Check By Key Trendline

Looking at General Motors, the stock is flat today at $37.58. Since a mid-June high near the $45 area, GM has given back 16.5%, ushered lower by its 20-day moving average. More recently, the stock gapped lower in late July following a subpar earnings report, running the year-to-date deficit to more than 8%. 

Like LKQ, GM showed up on White's list of stocks vulnerable to bear notes. Of the 15 brokerages covering GM, nine rate it a "buy" or better, with not a single "sell" on the books. In addition, the security's consensus 12-month price target of $46.84 sits at a nearly 25% premium to its current perch. 

Traders looking to take advantage of the equity's struggles may want to do so with near-term options, which are attractively priced at the moment. GM stock currently sports a Schaeffer's Volatility Index (SVI) of 23%, which ranks in the 21st percentile of its annual range. This suggests that near-term options are pricing in relatively low volatility expectations at the moment, which could help maximize the benefit of leverage for premium buyers.

Furthermore, the auto stock has been a good target for premium buyers during the past year. That's according to its Schaeffer's Volatility Scorecard (SVS) of 93 out of 100, which shows it's tended to make much bigger-than-expected moves on the charts compared to what the options market was expecting.

The shares of optical components maker Finisar Corporation (NASDAQ:FNSR) have added 7.5% in the past week. However, FNSR stock is flashing a historic "sell" signal on the charts -- and the bearish alarm has yet to be wrong. As such, now might be the time to consider short-term puts on the security.

Jumping right in, Finisar shares are now within one standard deviation of their 200-day moving average, after a lengthy stretch below this trendline. There have been five similar signals of this kind in the past, after which FNSR went on to sink 4.37%, on average, the subsequent week, per data from Schaeffer's Senior Quantitative Analyst Rocky White. One month later, the stock was lower 100% of the time, down an average of 12.26%.

As you can see on the chart below, the equity has been in a channel of lower highs and lows for roughly one year, with highs kept in check by the 200-day moving average. FNSR shares were last seen down 0.2% to trade at $18.24 -- an area that represents a roughly 25% gain from the security's April closing low of $14.67, and a 10% decline year-to-date. From current levels, another 12.26% pullback would put Finisar stock around $16.

Despite the stock's long-term struggles, Wall Street remains enamored. FNSR still sports six "buy" or better ratings, compared to five lukewarm "holds" and not a single "sell." The consensus 12-month price target of $21.09 represents a premium of nearly 16% to the equity's current price, and stands in territory not charted since March. A round of analyst downgrades or price-target cuts could send the shares reeling again.

Meanwhile, options traders have been picking up FNSR calls over puts at a rapid-fire rate. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 9.92 indicates nearly 10 Finisar calls have been bought to open for every put in the past two weeks. This ratio registers in the 96th percentile of its annual range, pointing to a much healthier-than-usual appetite for bullish bets over bearish of late.

However, short interest represents more than 19% of Finisar's total available float, even after declining 6.6% in the past two reporting periods. Considering FNSR's recent run higher, it's possible some of the aforementioned call buying -- particularly at out-of-the-money strikes -- could be attributable to shorts seeking an options hedge.

Whatever your motive, now is an opportune time to strike on FNSR's near-term options. The stock's Schaeffer's Volatility Index (SVI) of 35% is at the bottom of its annual range, suggesting short-term options are pricing in relatively low volatility expectations for the underperformer.