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)

Oct 23, 2015 at 9:21 AM
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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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