Weekly Wrap-up - The Dow Jones Industrial Average Gains 59 Points on the Week

The day ends with the Dow Jones Industrial Average (DJIA) holding the same small gain seen midday. The S&P 500 (SPX), Nasdaq Composite (COMP), and Russell 2000 (RUT) also ended flat. The Dow remained trapped in a tight low-to-high range of only 50 points and that range was established in the first hour. The action from then on was even less energetic.

Chart Courtesy of Thomson Reuters

The Oil Service HOLDRS (OIH), iShares Treasury Bond (TLT), and S&P Retail Index (RLX) led while the US Oil Fund (USO), Amex Gold Bugs Index (HUI), and Amex Networking Index (NWX) lagged.

Click here for symbol descriptions

My midday post noted that the short-term charts were unchanged from what we saw last night. Given the flat close, the status quo remains so this give us a chance the revisit the weekly charts.

Charts Courtesy of Thomson Reuters

For the week, the Dow Jones Industrial Average gained 59 points, .55%. The S&P 500 gained just under 1% while the Nasdaq Composite and Russell 2000 gained a little more than that. In other words, the week was essentially flat. While that isn't necessarily exciting action, the indexes are still holding the intermediate-term uptrends. As mentioned this afternoon, the market is overbought on a short-term basis. That doesn't mean we have to see an outright reversal, but it does put me on watch for near-term pullbacks and consolidations. And that is where I will pick up on Monday. Have a great weekend.

 Email to a Friend

 Del.icio.us

 Facebook

 Reddit

 Newsvine

 Digg

 Mixx

Pullback Prompts Put Buying on Evergreen Solar, Inc.

Put activity is much heavier than usual today on Evergreen Solar, Inc. (ESLR), with more than 4,100 of these bearishly skewed contracts crossing the tape so far. By contrast, the low-priced equity was expected to see put volume of just 173 contracts today.

The bulk of the activity is centered around ESLR's April 1 strike, where 4,000 contracts have traded so far. Nearly all of the major block trades at this strike have occurred at the ask price, suggesting that most of these contracts have been purchased. Since there's currently just one lone put contract in open interest at the April 1 strike, traders appear to be adding new positions here today.

With ESLR hovering near $1.23 this afternoon, April 1 put buyers are speculating on a near-term decline. However, this bearishly biased option activity is nothing new for the stock. ESLR's Schaeffer's put/call open interest ratio (SOIR) checks in at 0.43, in the 77th annual percentile -- revealing that short-term option players have been more pessimistically aligned just 23% of the time during the past year.

Short sellers are also piling on, with the number of ESLR shares sold short escalating by 10.7% during the past month. Now, short interest represents a lofty 12% of the stock's available float, or 8.5 times ESLR's average daily trading volume.

Today's uptick in put buying occurs as ESLR faces a critical juncture on the charts. The shares recently broke out above stubborn pressure from their 10-day and 20-day moving averages, but upward progress was halted by the $1.30 level. Now, the stock is struggling to maintain its hard-won foothold atop these short-term trendlines.

 Email to a Friend

 Del.icio.us

 Facebook

 Reddit

 Newsvine

 Digg

 Mixx

Midday Market Check - A Quiet Morning for the Dow Jones Industrial Average

We head into the second half of the session with another lackluster midday picture. The Dow Jones Industrial Average (DJIA) opened with a small rally but that quickly gave way to a minor dip into negative territory. The average has traded in a low-to-high range of only 50 points so far and currently sits 10 points above the breakeven line. The S&P 500 (SPX), Nasdaq Composite (COMP), and Russell 2000 (RUT) are also flat.

Chart Courtesy of Thomson Reuters

Today's strongest groups are the Oil Service HOLDRS (OIH), iShares Treasury Bond (TLT), and S&P Retail Index (RLX). However, the gains are limited. The US Oil Fund (USO), Amex Gold Bugs Index (HUI), and streetTRACKS Gold (GLD) are the weakest areas.

Click here for symbol descriptions

SUPERVALU INC. (NYSE: SVU), The Mosaic Company (NYSE: MOS), and Potash Corp. of Saskatchewan (NYSE: POT) are among the stocks seeing unusual option volume so far today.

Click image to see live data from
WhatsTrading.com in our Options Center

Supervalu tops today's list amid buyout chatter. Total option volume is 22 times the average with calls dominating. Shares of SVU are up 5%. This morning's put skew scan noted that Potash Corp was bid up in early action. Shares of POT tagged a new annual high and are up 7%. Options are 3 times as active as normal with calls making up 61% of the action. The Mosaic Company is up 6% and calls are active there as well.

Yesterday ended with the S&P 500 still flirting with a breakout. Today brings more of the same. The SPX did tick to a new annual high this morning but the momentum was short lived. The flat action here doesn't offer much of a change from what was noted last night. As has been the case for the last few sessions, the Nasdaq Composite and Russell 2000 are sitting above former resistance. All of the indexes are holding near-term uptrends but all are showing short-term overbought readings.

 Email to a Friend

 Del.icio.us

 Facebook

 Reddit

 Newsvine

 Digg

 Mixx

Traders Add Out-of-the-Money Calls on Hudson City Bancorp, Inc.

Call volume has accelerated today on Hudson City Bancorp, Inc. (HCBK), with more than 1,800 of these bullishly oriented options crossing the tape so far. This uptick in trading outpaces HCBK's expected daily call volume by a margin of nearly 15 to one, since the shares typically fly under the radar of most option players.

The center of attention today is HCBK's October 15 call, where 943 contracts have changed hands. The majority of these contracts have traded at the ask price, suggesting a bias toward buying activity, and implied volatility on this back-month option is up 2.6% at last check. Currently, the October 15 call has just 722 contracts in residence, so it's safe to assume that at least a portion of today's volume consists of freshly opened positions.

In fact, call buying appears to be a growing trend on HCBK. The stock sports a 10-day International Securities Exchange (ISE) call/put volume ratio of 6.75, with nearly seven times more calls than puts bought to open during the past two weeks. This ratio ranks in the 69th annual percentile, revealing that traders are purchasing bullish bets over bearish at a faster pace than usual.

This optimistically skewed option activity could be the result of increased hedging by the shorts. Short interest on HCBK rose by 5.9% during the most recent reporting period, and now accounts for 2.4% of the stock's float.

Alternatively, speculators could simply be trying to capitalize on a continuation of HCBK's recent strength. Like many regional banking issues, the stock has trekked higher this week amid ongoing merger-and-acquisition chatter, with Barclays (BCS) reportedly scoping the sector for a takeover target. However, on the charts, HCBK is staring up at stubborn resistance in the $14-to-$14.50 neighborhood. This region has capped the stock's progress since July 2009.

 Email to a Friend

 Del.icio.us

 Facebook

 Reddit

 Newsvine

 Digg

 Mixx

The Sentiment Behind The Ultimate Software Group Inc

The Ultimate Software Group, Inc. (NASDAQ: ULTI) is an interesting situation. As the company's site says, they provide the "'ultimate software' for human resources and payroll professionals." However, it is the sentiment backdrop and price action that I find intriguing. Let's start with the some data.

(Click image to see live data)

According to data collected by our Quantified Analysis department, 14% of the stock's float is sold short. That is a relatively high level and suggests skepticism. The mood on the Street also seems cynical as only 5 of 17 analysts (29%) rank The Ultimate Software Group with a buy rating. As a contrarian, I view this pessimism as an encouraging sign when viewed in the context of the chart below.

Chart Courtesy of Thomson Reuters

Heading into today, shares of The Ultimate Software Group were showing a 52-week gain of 99%. The stock is overbought but former congestion near 32 would be viewed as support.

 Email to a Friend

 Del.icio.us

 Facebook

 Reddit

 Newsvine

 Digg

 Mixx

Option Skews - Relatively Heavy Call Activity on Micron Technology Inc and Research In Motion Limited

Here are the stocks that saw a bias toward call activity in the previous session. This filtered scan is based on the International Securities Exchange (ISE) buy-to-open data. It looks for stocks where the previous day's call volume on the ISE is at least twice as great as the put volume. It then sorts the stocks based on the call volume. Since this is buy-to-open data, this can be a good source for finding stocks where optimism is emerging. Of particular interest to me would be situations where we see call activity on stocks that are still in intermediate-term downtrends. This would be a potentially cautionary sign from the contrarian perspective.

Micron Technology, Inc. (NASDAQ: MU) comes in near the top of the scan with over 5,000 calls bought on the ISE. The stock has continued to rally off support, extending the intermeidiate-term uptrend in place since November 2008.

Research In Motion Limited (USA) (NASDAQ: RIMM) has finally managed to break out of congestion, which is a constructive short-term sign. Overall, I have had my concerns about this equity (and been wrong) so I am watching to see how this plays out. The weekly chart shows the shares would need to push through 90 to clear the double peaks from last year but that is 20% higher than current levels.

Companies included in today's scan results: Citigroup Inc (C), Intel Corp. (INTC), Micron Technology Inc (MU), Hologic (HOLX), Huntington Bancshares Incorporated (HBAN), Las Vegas Sands Corp (LVS), Research in Motion Limited (RIMM), Wells Fargo & Co (WFC), AES Corp. (AES), Qwest Communications International (Q), Illinois Tool Works (ITW), SLM Corp. (SLM), Best Buy Co. (BBY), MEMC Electronic Materials Inc (WFR), Palm Inc (PALM), Pfizer (PFE), Alkermes (ALKS), First Solar, Inc. (FSLR), Commercial Metals (CMC), CIGNA Corp. (CI), CA Inc. (CA), Visa Inc. (V), Qualcomm Inc (QCOM), Hecla Mining (HL), Hartford Financial Services (HIG).

 Email to a Friend

 Del.icio.us

 Facebook

 Reddit

 Newsvine

 Digg

 Mixx

Option Skews - Relatively Heavy Put Activity on American International Group Inc, Advanced Micro Devices Inc, Potash Corp. of Saskatchewan

Here are the stocks that saw a bias toward put activity in the previous session. This filtered scan is based on the International Securities Exchange (ISE) buy-to-open data. It looks for stocks where the previous day's put volume on the ISE is at least twice as great as the call volume. It then sorts the stocks based on the put volume. Since this is buy-to-open data, this can be a good source for finding stocks where skepticism is emerging. Of particular interest to me would be situations where we see put activity on stocks that are still in intermediate-term uptrends. This would be a potentially encouraging sign from the contrarian perspective.

American International Group, Inc. (NYSE: AIG) has been a hot bed of activity recently. Last Monday we saw the equity was poised to challenge resistance near 28. Tuesday's short interest scan noted the shares were in a position to break a near-term downtrend. The company then appeared on the next day's unusual stock volume scan showing a gain of more than 12%. The equity stopped for a breather yesterday amid overbought readings. The area near 33 looks to be short-term support.

Just over 6,000 puts were bought on Advanced Micro Devices, Inc. (NYSE: AMD). That continues the put activity noted Monday. At they stand now, shares of AMD are up nearly 4% on the week.

Keep an eye on Potash Corp. of Saskatchewan (NYSE: POT). The stock is bid up 9% to 126 in pre-open action. That puts the equity at the annual high hit in January.

Companies included in today's scan results: SPDR Gold Trust (GLD), PowerShares QQQ Trust (QQQQ), American International Group Inc (AIG), Advanced Micro Devices (AMD), Ryland Group (RYL), Cheesecake Factory Incorporated (CAKE), Walgreen (WAG), Zimmer (ZMH), ATP Oil & Gas Corp (ATPG), Aeropostale Inc (ARO), CVS Corp. (CVS), Ford Motor Co (F), CF Industries Holdings (CF), Potash Corp. of Saskatchewan (POT), Boeing (BA), Veeco Instruments (VECO), Abbott Laboratories (ABT), Molex Incorporated (MOLX), LDK Solar Co Ltd (LDK), Atheros Communications (ATHR), Acorda Therapeutics, Inc. (ACOR), Merck (MRK), DEUTSCHE BANK AG (DB), BB&T Corp. (BBT), Enterprise Products Partners (EPD).

 Email to a Friend

 Del.icio.us

 Facebook

 Reddit

 Newsvine

 Digg

 Mixx

Stocks Advancing Amid Heavy Short Interest - Clean Energy Fuels Corp, Canadian Solar Inc, Acorda Therapeutics Inc, Sunesis Pharmaceuticals, Inc

As explained in our education section, short interest is a useful sentiment indicator that measures the level of investor pessimism toward a stock. While it isn't always a simple "long only" indicator, it can give you insight into situations where you might see concentrated buying demand. The purpose of this post is to highlight heavily-shorted stocks that could be in the midst of a potential short covering rally. More details about the methodology are listed below.

The table below shows a couple of reoccurring themes that I have been following. The first began last week when we saw signs that the biotech sector was on the move. Since that post we have seen a number stocks related to that area show up and today that continues with Metabolix, Inc. (NASDAQ: MBLX), Sunesis Pharmaceuticals, Inc. (NASDAQ: SNSS), Incyte Corporation (NASDAQ: INCY), and Acorda Therapeutics Inc. (NASDAQ: ACOR) making the list.

The other theme relates to Clean Energy Fuels Corp. (NASDAQ: CLNE), FuelCell Energy, Inc. (NASDAQ: FCEL), Canadian Solar Inc. (NASDAQ: CSIQ), and Fuel Systems Solutions, Inc. (NASDAQ: FSYS). Tuesday's short interest scan noted some activity in the alternative energy group. There is action in names ranging from fuel cells to solar to alternative fuels like natural gas. In general, alternative energy stocks have a history of being "momentum names" so it is worth watching to see if buyers are starting to return in force.

Methodology - the query scans my database of companies which has some basic filters to eliminate stocks that don't trade frequently. The table above is a filtered list of stocks that have at least 10 percent of their float sold short and showed a gain in the previous trading day. I use this as a tool for finding situations where stocks with heavy short interest have begun to move.

Companies included in today's scan are: Capitol Bancorp. (CBC), Clean Energy Fuels Corp. (CLNE), Metabolix, Inc. (MBLX), The Gymboree Corp (GYMB), FuelCell Energy (FCEL), Synovus Financial (SNV), Fuel Systems Solutions Inc (FSYS), Sunesis Pharmaceuticals, Inc. (SNSS), Canadian Solar Inc. (CSIQ), AeroVironment, Inc. (AVAV), BankAtlantic Bancorp (BBX), Trex (TWP), Sterling Financial (STSA), United Community Banks (UCBI), PrivateBancorp (PVTB), Burger King Holdings, Inc. (BKC), Gamestop Corp (GME), C&D Technologies (CHP), NetSuite Inc. (N), Travelzoo Inc (TZOO), Stewart Enterprises (STEI), CompuCredit (CCRT), Incyte Corp. (INCY), Acorda Therapeutics, Inc. (ACOR), EnerNOC, Inc. (ENOC).

Like this post?

If so, you can get it delivered to your inbox every day. To try it, simply click here and sign in with your Schaeffer's username and password. If you don't have a free membership, you can create one in just seconds. Once on the alerts page, select "phrase" from the first drop down box, select "intraday", and enter "Stocks Advancing Amid Heavy Short Interest" into the third box. You can repeat that process for other regular posts or change the setting to "author" and enter "Nick Perry" to get all the posts. Just remember, I make multiple posts a day so you will get numerous emails if you select intraday...

 Email to a Friend

 Del.icio.us

 Facebook

 Reddit

 Newsvine

 Digg

 Mixx

Stocks Showing Unusually Heavy Volume - Globalstar Inc, RXi Pharmaceuticals Corp, Capitol Bancorp Ltd, Hologic Inc, Citigroup Inc

Here are the results for today's unusual stock volume scan. The scan looks at the previous day's volume and compares it to the recent average volume. It then sorts the stocks based on those that showed the biggest increase (the "unusual" part) in volume.

Companies included in today's scan are: SkillSoft plc (SKIL), Clean Energy Fuels Corp. (CLNE), Globalstar, Inc. (GSAT), Mattson Technology (MTSN), RXi Pharmaceuticals Corp (RXII), Capitol Bancorp Ltd (CBC), The Gymboree Corp (GYMB), Zimmer (ZMH), Blount International (BLT), Cinemark Holdings, Inc. (CNK), Hologic (HOLX), Synovus Financial (SNV), Wright Medical Group (WMGI), Maidenform Brands, Inc. (MFB), C&D Technologies (CHP), Psychiatric Solutions (PSYS), Metabolix, Inc. (MBLX), Idenix Pharmaceuticals (IDIX), Nabi Biopharmaceuticals (NABI), Trex (TWP), Huntington Bancshares Inc (HBAN), Gamestop Corp (GME), FuelCell Energy (FCEL), Alkermes (ALKS), Citigroup Inc (C).

More on Hologic, Inc. (NASDAQ: HOLX) can be found in yesterday's midday market check...

These are the top stocks from today's scan, which has some basic filters to eliminate stocks that don't trade frequently. A description of the column headings is below.

• Move Previous Day - yesterday's percent return.
• Volume Increase - looks at the previous day's volume and compares it to the recent average volume. It then sorts the stocks based on those that showed the biggest increase (the "unusual" part) in volume.
• Close - yesterday's closing price.
• Total Ratings - number of analysts who track the stock, according to Zacks.
• Buy Percent - percent of the analysts who rate the stock as a "buy". I use this to help gauge sentiment and potential buying demand. If everyone already loves a stock, that means a steady stream of new money will need to enter the stock to fuel a rally.

Note - sentiment data is current as of the previous trading day...

 Email to a Friend

 Del.icio.us

 Facebook

 Reddit

 Newsvine

 Digg

 Mixx

Futures on the Dow Jones Industrial Average Suggest a 25-Point Gain

Good morning everyone - welcome to the final day of this trading week. We start the session with stock futures showing a minor upside bias. The S&Ps are 3 points above fair value. As they stand now, futures on the Dow Jones Industrial Average (DJIA) are suggesting an opening gain of 25 points.

 Email to a Friend

 Del.icio.us

 Facebook

 Reddit

 Newsvine

 Digg

 Mixx