Buzz Stocks: Diamond Foods, Inc., Tesla Motors Inc, and Twitter Inc

Today's stocks to watch include Diamond Foods, Inc. (DMND), Tesla Motors Inc (TSLA), and Twitter Inc (TWTR)

by Andrea Kramer

Published on Oct 23, 2015 at 9:21 AM

U.S. stocks are set to rally, thanks to encouraging earnings and a rate cut out of China. Among the equities in focus are snack maker Diamond Foods, Inc. (NASDAQ:DMND), electric vehicle titan Tesla Motors Inc (NASDAQ:TSLA), and microblogging concern Twitter Inc (NYSE:TWTR).

  • DMND is pointed 9.7% higher in pre-market trading -- and headed for a three-year peak -- after the New York Post said Kellogg Company (NYSE:K) is in talks to buy the firm for $1.5 billion, or roughly $35 to $40 per share. A bid of $40 per share would represent a premium of 21.8% to DMND's closing price of $32.83 yesterday. Prior to today, DMND had been bumping up against familiar resistance in the $33-$34 region, and a recent crop of option bulls are likely cheering their bets. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Diamond Foods, Inc. sports a 10-day call/put volume ratio of 104.70 -- in the 90th percentile of its annual range.
  • TSLA is up 1.7% pre-market from Thursday's close at $211.72, after CEO Elon Musk said the company could start manufacturing cars in China in two years. Although Tesla Motors Inc shares have underperformed the broader S&P 500 Index (SPX) recently -- with help from a damning Consumer Reports downgrade -- the equity's 14-day Relative Strength Index (RSI) of 34 suggests it's near oversold territory. A rebound could spook quite a few shorts, as short interest accounts for nearly 26% of TSLA's total available float. In fact, it would take more than six days to buy back these bearish bets, at the stock's average daily trading volume.
  • TWTR's new CEO is also making noise this morning. Jack Dorsey said he will give about one-third of his Twitter Inc stake -- representing 1% of the company -- to an equity pool for employees, in order to "reinvest directly in our people." After closing at $29.15 yesterday, the shares of TWTR are pointed 1.8% higher ahead of the bell -- but could find a speed bump in the $30 region, home to their 20-week moving average. Ahead of earnings next Tuesday, option players are picking up bullish bets over bearish at a much faster-than-usual clip, as the security's 10-day ISE/CBOE/PHLX call/put volume ratio of 3.73 stands higher than 96% of all other readings from the past year.

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