Buzz Stocks: Facebook, Alibaba, and Novartis AG

Today's stocks to watch include Facebook Inc (FB), Alibaba Group Holding Ltd (BABA), and Novartis AG (ADR) (NVS)

Jan 27, 2015 at 9:08 AM
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Stocks are set to open in the red, as traders digest a round of lackluster blue-chip earnings and a surprise drop in durable goods. Among the equities in focus are social networking titan Facebook Inc (NASDAQ:FB), Chinese e-commerce concern Alibaba Group Holding Ltd (NYSE:BABA), and Swiss drugmaker Novartis AG (ADR) (NYSE:NVS).

  • FB is pointed 1% lower ahead of the bell, after the website -- as well as Instagram and other some notable apps -- went down this morning. Despite hacking group Lizard Squad claiming responsibility for the blackout -- which lasted about an hour -- Facebook Inc said it "was not the result of a third party attack." On the charts, FB has spent most of the past six months dancing in the $74-$82 range, and settled at $77.49 on Monday. From a longer-term perspective, the equity has advanced nearly 45% year-over-year, yet short-term option traders are unusually put-heavy ahead of the company's turn in the earnings spotlight tomorrow night. The security's Schaeffer's put/call open interest ratio (SOIR) of 0.67 stands higher than three-quarters of all other readings from the past year.

  • BABA is set to dip 0.8% out of the gate, after the company's entertainment arm warned of a loss for 2014 (subscription required). Separately, BABA said Chinese movie star Zhao Wei bought a sizable stake in Alibaba Pictures. Technically speaking, BABA is just a hair north of its year-to-date breakeven, landing at $103.99 on Monday. Since skimming $120 -- an all-time peak -- in mid-November, the equity has surrendered 13.3%, with rebound attempts halted by its 10-week trendline. Still, option buyers are optimistic ahead of Alibaba Group Holding Ltd's turn in the earnings confessional Thursday morning. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open about 1.7 calls for every put during the past two weeks.

  • Finally, NVS is flirting with a 2% gain in pre-market action, and could test its mettle near the century mark, after finishing at $96.49 on Monday. While the firm said fourth-quarter earnings fell 26%, annual profit rose 12% in 2014, and the future looks bright. Specifically, Novartis AG said it expects sales in 2015 to grow at a mid-single digit rate. A post-earnings rally could spook some of the recent option bears, as NVS' 10-day ISE/CBOE/PHLX put/call volume ratio of 0.76 stands higher than 68% of all other readings from the past year, pointing to a healthier-than-usual appetite for long puts over calls of late. In addition, short interest grew nearly 28% during the past two reporting periods, yet still accounts for a scant 0.06% of the security's total available float.

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