2 Blue Chips Booming on Buyback Buzz

JNJ stock was oversold heading into today's trading

by Karee Venema

Published on Dec 18, 2018 at 10:07 AM
Updated on Feb 21, 2019 at 10:33 AM

Boeing Co (NYSE:BA) said it's boosting its quarterly dividend by 20%, and hiking its share buyback program by $2 billion to $20 billion. In reaction to the news, BA shares are up 4.2% to trade at $329.53, climbing back above their 320-day moving average, which has served as a magnet in recent weeks.

The shares of the aerospace giant are still on track to snap their 10-quarter win streak, down nearly 12% since their Sept. 28 close at $371.91. Short sellers have started targeting Boeing stock amid this weakness, with short interest up 15% from its early September multi-year lows. However, the 4.96 million shares currently sold short account for less than 1% of BA's available float.

Fellow Dow stock Johnson & Johnson (NYSE:JNJ) is also trading higher on buyback news today, last seen up 1.4% at $131.02. The consumer products specialist said its board has approved a $5 billion share repurchase program.

The stock was also oversold coming into today's trading, per its 14-day Relative Strength Index (RSI) of 25 -- which suggests a short-term bounce was likely in the cards. Specifically, JNJ stock shed 12.7% from its Dec. 13 through Dec. 17 closes, after a Reuters report claimed the company knew about asbestos in its Baby Powder product -- an accusation Johnson & Johnson CEO Alex Gorsky called "false" in a CNBC interview.

Options bears have been blasting JNJ stock in recent weeks, too. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 1.49 ranks in the 97th annual percentile, meaning puts have been bought to open over calls at a quicker-than-usual clip.

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