Buzz Stocks: Caterpillar Inc., Dow Chemical Co, and Michael Kors Holdings Ltd

Today's stocks to watch include Caterpillar Inc.(CAT), Dow Chemical Co (DOW), and Michael Kors Holdings Ltd (KORS)

Oct 22, 2015 at 10:14 AM
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U.S. benchmarks are off and running this morning, thanks to solid earnings from Dow component McDonald's Corporation (NYSE:MCD). Among the equities in focus are blue-chip transportation concern Caterpillar Inc. (NYSE:CAT), agricultural issue Dow Chemical Co (NYSE:DOW), and global retail company Michael Kors Holdings Ltd (NYSE:KORS).

  • After spending pre-market trading in negative territory, shares of CAT are 2.2% higher at $70.41 this morning, despite reporting lackluster third-quarter sales and lowering its full-year earnings guidance. Still, Caterpillar Inc. shares have dropped more than 22% since the start of the calendar year, beneath resistance at their 10-week moving average. Despite this poor technical performance, it appears option players were expecting a positive reaction to CAT's earnings news. The equity's 10-day call/put volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at 1.12 -- in the 84th percentile of all readings taken in the past year. 
  • DOW is 8.1% higher at $51.30 this morning, as a third-quarter revenue miss has overshadowed the company's plans to review options for its agrosciences business. The stock is now on pace to end atop $50 for the first time since July, and sports a year-to-date gain of 12.5%. On the ISE/CBOE/PHLX, DOW's 50-day put/call volume ratio checks in at 1.47, higher than 88% of the readings taken in the past year. A mass exodus of option bears could propel Dow Chemical Co shares even higher. Upgrades could also help push the stock higher, as the equity sports eight "hold" or worse rankings, out of 14 total. Most notably, short sellers could be feeling the heat, after a massive influx of short positions during the past two reporting periods.
  • KORS is 1% higher at $39.94, after it was revealed billionaire investor David Einhorn's Greenlight Capital hedge fund initiated a new long position in the firm. Technically, shares of Michael Kors Holdings Ltd have spent the past few months testing support in the $40 area, with rebound attempts stifled by their 10- and 20-week moving averages. Option players seem to believe the stock is destined to rally, as KORS' 10-day ISE/CBOE/PHLX call/put volume ratio comes in at 2.97 -- higher than 75% of the readings taken during the past 52 weeks. While option players are fairly bullish, analysts are not. Of the 19 analysts tracking the fashion firm, 14 rate it a "hold" or worse. 
 

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