Daily Wrap-up - A 44-Point Gain for the Dow Jones Industrial Average

The day ends with the Dow Jones Industrial Average (DJIA) up 44 points. The S&P 500 (SPX), Nasdaq Composite (COMP), and Russell 2000 (RUT) also posted moderate gains. The chart below shows how the day played out. The action drifted to flat ahead of the FOMC announcement, then after the typical post-Fed-stutter-step, buyers stepped in for the final hour.

Chart Courtesy of Thomson Reuters

Most of the sectors I track ended higher as well. The Semiconductor HOLDRS (SMH), Amex Gold Bugs Index (HUI), and US Oil Fund (USO) led while the Amex Biotech Index (BTK) lagged.

Click here for symbol descriptions

My midday post noted that I generally don't put too much emphasis on the broad market action ahead of the FOMC announcements. The subsequent rally is interesting though as it allowed the S&P 500 to finally clear resistance.

Charts Courtesy of Thomson Reuters

All of the indexes remain in overbought territory but the SPX, COMP, and RUT all sit above support. The DJIA is now in a position to challenge its highs from January so that is what I will be watching next. And that is where I will pick up in the morning. Have a nice evening.

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Back-Month Call Volume Skyrockets on Vale S.A.

Call volume has skyrocketed today on Vale S.A. (VALE), with five times the usual number of contracts crossing the tape. So far, about 109,000 of these bullishly oriented bets have traded, easily outpacing VALE's expected call volume of about 22,000 contracts.

The day's most popular strike is far and away VALE's June 33 call, where 79,150 contracts have traded so far. This option currently carries open interest of 10,239 contracts, suggesting that the bulk of today's volume consists of freshly opened calls.

Additionally, buyers seem to be responsible for the majority of the activity at this out-of-the-money strike. Two massive blocks totaling 75,000 contracts changed hands earlier at the ask price, suggesting they were purchased. Implied volatility on the June 33 call is up 0.4% at last check, pointing to rising demand for this back-month option.

This sudden interest in VALE calls coincides with reports on forthcoming price hikes in the raw materials sector. The Brazilian miner is "expected to push for iron ore price increase of around 80% to 90% and around 55% higher coking coal prices," according to a Dow Jones report hitting the wires today.

Today's bullishly biased option volume is a deviation from the norm for VALE, which sports a skeptically skewed Schaeffer's put/call open interest ratio (SOIR) of 0.92, in the 80th annual percentile. However, in light of a 20.6% jump in short interest during the past month, some of the call buying on VALE today could be linked with increased hedging activity by the bears.

On the charts, VALE is up about 2% this afternoon. The stock is hovering between support at its 10-day and 20-day moving averages, and looming resistance near the $32 area -- the site of its current annual high.

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Midday Market Check - The Dow Jones Industrial Average Holds 15-Point Gain Ahead of Fed

We head into the second half of the session with a moderate upside bias as the FOMC rate decision looms. The Dow Jones Industrial Average (DJIA) sits 15 points above the breakeven line. The S&P 500 (SPX), Nasdaq Composite (COMP), and Russell 2000 (RUT) are holding mild-to-moderate gains. Though, it is worth pointing out that the SPX has ticked to a new annual high.

Chart Courtesy of Thomson Reuters

Today's strongest groups are the Semiconductor HOLDRS (SMH), Amex Gold Bugs Index (HUI), US Oil Fund (USO), and streetTRACKS Gold (GLD). The Amex Biotech Index (BTK) is the weakest area.

Click here for symbol descriptions

Harley-Davidson, Inc. (NYSE: HOG) and Cummins Inc. (NYSE: CMI) are among the stocks seeing unusual option volume so far today.

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

Harley-Davidson tops the table with total option volume that is nearly 10 times the average. Just over 60% of the action is on the call side as the stock trades up 6% amid chatter the company could be taken private. Shares of Cummins are flat but option volume is 6 times the average with put volume dominating. It looks like the company has an analyst meeting today.

Yesterday ended with a discussion about overbought readings and research on triple-witching weeks. The buzz today is, of course, all about the Fed. I generally don't put too much emphasis on the broad market action ahead of the FOMC announcements. Instead, I will be watching the subsequent reaction and will post the usual daily charts after the close.

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Short Strangle Speculator Pinpoints a Trading Range for E-Trade Financial Corporation

Options volume has jumped to about three times the expected level today on E-Trade Financial Corporation (ETFC), with both puts and calls enjoying a surge in popularity. Taking a closer look at today's major block trades, it looks as though one speculator is responsible for a healthy portion of the activity on both sides of the fence.

Shortly after the open, a block of 15,000 contracts traded on the July 1.50 put at the bid price of $0.10. Simultaneously, a matching block of 15,000 contracts changed hands on the July 2 call for the bid price of $0.08. With ETFC trading squarely between these two strikes, both of these options are narrowly out of the money.

Today's volume is exceeding open interest at the July 1.50 put, confirming that these are newly opened positions. Open interest still outnumbers volume on the July 2 call -- but with this strike carrying zero intrinsic value, it seems unlikely that call buyers would be liquidating their long positions here today. In other words, this appears to be the initiation of a short strangle on ETFC.

By selling an equal number of calls and puts at these out-of-the-money strikes, the short strangle speculator is wagering that ETFC will remain pinned between $1.50 and $2 per share through July expiration. In this scenario, all of the options involved will expire worthless, with the trader retaining the initial upfront credit as his maximum potential profit.

From a technical perspective, there's reasonable justification for betting on range-bound price action from ETFC. Since May 2009, the stock has made only brief trip north of $2; meanwhile, the $1.40 area has provided support since late August.

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The Sentiment Behind Onyx Pharmaceuticals Inc

Onyx Pharmaceuticals, Inc. (NASDAQ: ONXX) gapped higher this morning but the stock has been retreating from its initial highs. While that plays out, here is a look behind the scenes at the sentiment profile.

(Click image to see live data)

As is often the case, we have conflicting indicators. On the one hand we have some mild optimism from the Street. Heading into today, 9 of 15 analysts (60%) ranked Onyx Pharmaceuticals with a buy rating. Meanwhile, we have a rising level of skepticism from short sellers. According to data collected by our Quantified Analysis department, 10% of the stock's float is sold short. The Schaeffer's Put/Call Open Interest Ratio (SOIR) does show a recent surge but that was related to expiration and not a sudden influx of put activity. However, there might end up being some movement on the SOIR as the company popped up on the early edition of our unusual option volume table.

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

Total option volume is running twice the average with the majority of the action on the call side. This comes as the stock is trying to break out of congestion.

Chart Courtesy of Thomson Reuters

Shares of Onyx Pharmaceuticals have been battling resistance since December. There have been several rally attempts since then but each was met with selling pressure. Today's gap is the first definite break of this congestion. The key is whether the breakout holds. As illustrated by the chart, this is can be a volatile stock so keep that mind.

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Option Skews - Relatively Heavy Call Activity on General Electric Co, Motorola Inc, Amgen Inc

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.

General Electric Company (NYSE: GE) is showing some signs of strength. The stock hit a peak last September and then staged a short-term pullback which bottomed in November. Since then, shares of GE have been creeping higher and are now challenging the September highs.

Motorola, Inc. (NYSE: MOT) is a slightly different situation. Like GE, it peaked in September but shares of MOT then drifted sideways and began to steadily lose ground in December. The stock finally hit a short-term bottom at the end of January and are now trying to claw their way back.

Amgen, Inc. (NASDAQ: AMGN) remains near the middle of the price compression mentioned last week. Monday's call activity was relatively light but I am noting it as I would start to get concerned if we see a steady build up of calls.

Companies included in today's scan results: Citigroup Inc (C), General Electric (GE), Boston Scientific (BSX), Google Inc (GOOG), Monsanto Co (MON), SLM Corp. (SLM), McMoRan Exploration (MMR), eBay Inc (EBAY), First Solar, Inc. (FSLR), Wal-Mart Stores Inc (WMT), Micron Technology Inc (MU), UnitedHealth Group Inc (UNH), Research in Motion Limited (RIMM), Motorola (MOT), Coca-Cola Enterprises (CCE), Pfizer (PFE), Las Vegas Sands Corp (LVS), Alkermes (ALKS), Lam Research (LRCX), Amgen Inc (AMGN), Dow Chemical (DOW), Coca-Cola (KO), KLA-Tencor (KLAC), Varian Semiconductor Equipment (VSEA), MBIA Inc (MBI).

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Option Skews - Relatively Heavy Put Activity on Zions Bancorporation, JetBlue Airways Corp, QLogic Corp, International Business Machines Corp

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.

I looked at Zions Bancorporation (NASDAQ: ZION) last week and noted that the stock was surrounded by pessimism. The equity is so far holding the recent gains as it tries to break free of congestion.

The weekly chart of JetBlue Airways Corporation (NASDAQ: JBLU) shows a price compression. A pattern of lower highs is converging on a pattern of higher lows. Something has to break in the next few weeks.

QLogic Corporation (NASDAQ: QLGC) has been moving steadily higher since mid-February and the shares are poised to challenge resistance near 21.

The monthly chart of International Business Machines Corp. (NYSE: IBM) is worth watching. Big blue recently pushed into long-term congestion that begins near 130. The equity initially retreated from this resistance but quickly stabilized and has been holding just below this zone. An eventual push above 140 would mark a significant breakout but keep in mind this is a monthly charts so this will take to play out.

Companies included in today's scan results: SPDR Trust Series I (SPY), PowerShares QQQ Trust (QQQQ), Goldman Sachs Group (GS), Verizon Communications (VZ), FedEx Corp. (FDX), Petroleo Brasileiro SA (PBR), CIGNA Corp. (CI), JPMorgan Chase & Co (JPM), Continental Airlines (CAL), Fuqi International Inc (FUQI), Zions Bancorporation (ZION), JetBlue Airways Corp (JBLU), Comcast Corp. (CMCSK), QLogic Corp. (QLGC), Netlogic Microsystems (NETL), Western Digital (WDC), Avnet (AVT), Oracle Corp. (ORCL), Assured Guaranty Ltd (AGO), IBM (IBM), Knight Capital Group Inc (NITE), Best Buy Co. (BBY), Simon Property Group (SPG), Infosys Technologies (INFY), Lions Gate Entertainment (LGF).

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Stocks Advancing Amid Heavy Short Interest - Amylin Pharmaceuticals Inc, Alkermes Inc, Cypress Bioscience Inc, Cell Therapeutics 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.

Two weeks ago we saw that biotech stocks were dominating this scan. Since then, members from this group have continued to pop up and today is no exception. Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN), Alkermes, Inc. (NASDAQ: ALKS), Cypress Bioscience, Inc. (NASDAQ: CYPB), and Cell Therapeutics, Inc. (NASDAQ: CTIC) are among the stocks that made a move Monday. (To illustrate the activity, I compiled the links below to the scans posted since the link above.) There are obviously a lot of differences between the various situations. For example, Amylin Pharmaceuticals and Alkermes just hit new annual highs while Cypress Bioscience and Cell Therapeutics recently hit near-term lows. However, they all have shown an ability to post short-term moves so the group is worth watching. Here are the recent short interest scans -

• Stocks Advancing Amid Heavy Short Interest - RF Micro Devices Inc, Freddie Mac, Boyd Gaming Corp, InterMune Inc
  
  
• Stocks Advancing Amid Heavy Short Interest - Affymetrix Inc, Martek Biosciences Corp, China BAK Battery Inc, Netlist Inc, Monster Worldwide Inc
  
  
• Stocks Advancing Amid Heavy Short Interest - InterMune Inc, Molecular Insight Pharmaceuticals Inc, Cell Therapeutics Inc, Ciena Corp
  
  
• Stocks Advancing Amid Heavy Short Interest - American International Group Inc, Travelzoo Inc, Energy Conversion Devices Inc, Cell Therapeutics Inc
  
  
• Stocks Advancing Amid Heavy Short Interest - Netlist Inc, YRC Worldwide Inc, Clearwire Corp, Alkermes Inc
  
  
• Stocks Advancing Amid Heavy Short Interest - Psychiatric Solutions Inc, Amylin Pharmaceuticals Inc, Cardionet Inc, Jazz Pharmaceuticals Inc
  
  
• Stocks Advancing Amid Heavy Short Interest - Clean Energy Fuels Corp, Canadian Solar Inc, Acorda Therapeutics Inc, Sunesis Pharmaceuticals, Inc
  
  
• Stocks Advancing Amid Heavy Short Interest - Salix Pharmaceuticals Ltd, Red Robin Gourmet Burgers Inc, Cbeyond Inc, Digital River Inc

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: Amylin Pharmaceuticals Inc (AMLN), Alkermes (ALKS), BankAtlantic Bancorp (BBX), XenoPort, Inc. (XNPT), Anchor BanCorp Wisconsin (ABCW), Amcore Financial (AMFI), Pegasystems (PEGA), Silicon Motion Technology Corporation (SIMO), Cascade Bancorp (CACB), Medicis Pharmaceutical (MRX), Cypress Bioscience (CYPB), Pacific Capital Bancorp (PCBC), Beazer Homes USA (BZH), Cell Therapeutics (CTIC), Eastman Kodak (EK), USEC (USU), Focus Media Holding Limited (FMCN), TCF Financial (TCB), Greenhill (GHL), Trinity Industries (TRN), Columbia Sportswear (COLM), Scholastic (SCHL), American Vanguard (AVD), Saks Incorporated (SKS), InterMune (ITMN).

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...

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Stocks Showing Unusually Heavy Volume - St. Jude Medical Inc, Baidu Inc, Inspire Pharmaceuticals Inc, Hoku Scientific Inc, Angiotech Pharmaceuticals 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: Boston Scientific (BSX), St. Jude Medical Inc (STJ), Amylin Pharmaceuticals Inc (AMLN), Alkermes (ALKS), BankAtlantic Bancorp (BBX), Baidu Inc. (BIDU), Knight Capital Group Inc (NITE), Quiksilver Inc (ZQK), Inspire Pharmaceuticals Inc (ISPH), Hoku Scientific, Inc. (HOKU), Pegasystems (PEGA), Varian Semiconductor Equipment (VSEA), Angiotech Pharmaceuticals Inc (ANPI), Amcore Financial (AMFI), Medicis Pharmaceutical (MRX), RXi Pharmaceuticals Corp (RXII), Medtronic (MDT), Eastman Kodak (EK), Zebra Technologies (ZBRA), Shuffle Master Inc (SHFL), Myriad Genetics (MYGN), KLA-Tencor (KLAC), Interactive Brokers Group, Inc. (IBKR), DivX, Inc. (DIVX), American International Group Inc (AIG).

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...

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Futures on the Dow Jones Industrial Average Suggest a Flat Open

Good morning everyone - welcome to Tuesday. We start the day with stock futures showing a very slight upside bias. The S&Ps are 3 point above fair value. As they stand now, futures on the Dow Jones Industrial Average (DJIA) are suggesting an opening gain of roughly 15 points.

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Daily Wrap-up - A 17-Point Gain for the Dow Jones Industrial Average

The day ends with the Dow Jones Industrial Average (DJIA) showing a gain of 17 points. The S&P 500 (SPX) finished flat. The Nasdaq Composite (COMP) and Russell 2000 (RUT) held small losses.

Chart Courtesy of Thomson Reuters

The midday sector action showed a downside bias and that improved slightly as the day wore on. The Amex Biotech Index (BTK) led while the US Oil Fund (USO), Natural Gas Index (XNG), PowerShares Clean Energy ETF (PBW), and Oil Service HOLDRS (OIH) lagged.

Click here for symbol descriptions

My midday post said to keep an eye out for buyers to step in. I am not sure I really call a 17 point gain a sign of strength but the Dow did at least manage to rebound from its lows. The charts below show the indexes are still showing overbought readings.

Charts Courtesy of Thomson Reuters

Both the COMP and RUT remain above their January highs. The SPX is challenging its former highs while the Dow has yet to mount an assault. That is the same technical picture we have seen for the last few days (though it feels like an eternity). The obvious change here is that I have added short-term trendlines to highlight the current trends. Simple trendlines like this have many failings in terms of being predictive tools but I still use them to gauge simple trends.

In other words, they offer an easy way to gauge when the speed of a trend may be changing. With the indexes overbought, this gives a quick way to judge any pullbacks or consolidations. Of course, Rocky White's research on triple-witching weeks suggests we may not see a pullback this week. And that is where I will pick up in the morning. Have a nice evening.

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Shorts Could Be Driving Call Activity on Level 3 Communications, Inc.

Level 3 Communications, Inc. (LVLT) has attracted an unusually heavy dose of call speculation today. So far, more than 1,500 of these bullishly oriented options have crossed the tape, easily outpacing LVLT's expected call volume of about 420 contracts.

Nearly all of this activity is taking place at LVLT's September 2.50 call, where 1,530 contracts have traded. Several substantial blocks traded near the ask price earlier today, suggesting that buyers are responsible for the bulk of the volume at this out-of-the-money strike.

With open interest of 10,653 contracts easily outstripping today's volume, it's hard to tell whether today's September 2.50 call volume consists of liquidations or newly opened positions. However, this option is about one point out of the money with roughly six months to go until expiration, so it seems unlikely that call writers would be closing out their positions so soon.

While traders may very well be buying new calls at this strike today, it's not necessarily indicative of bullish speculation. Short interest on LVLT jumped by 9.2% during the most recent reporting period, and these pessimistic bets now represent a noteworthy 7.1% of the stock's float. With so many short sellers piling on, it's possible that traders are buying out-of-the-money calls simply to hedge their bearish stock positions.

On the charts, LVLT is off 1.9% this afternoon. The shares are retreating from stubborn resistance near $1.65, which has rejected all of the stock's rally attempts since mid-September 2009.

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Short-Term Speculators Set Their Sights on SLM Corporation

With options expiration approaching at the end of the week, March 13 calls are the options of choice today for very short-term speculators on SLM Corporation (SLM). The stock's March 13 call has seen 10,348 contracts cross the tape so far, and implied volatility on this option has surged 20% at last check. For comparison's sake, the student lender more casually known as Sallie Mae was only expected to see about 3,200 calls change hands today.

Nearly all of the major block trades on SLM's March 13 call have taken place at the ask price, indicating a bias toward buying activity. This strike currently carries open interest of 13,740 contracts, so it's unclear whether today's volume consists primarily of new additions or liquidations of existing contracts. However, the steep rise in implied volatility suggests that we could be seeing new calls opened at this strike today.

This call-heavy option activity is a deviation from the recent trend on SLM, which has snagged a 10-day International Securities Exchange (ISE) put/call volume ratio of 1.22. This ratio ranks in the 90th annual percentile, revealing that traders on the ISE have rarely purchased puts over calls at a faster pace.

The sudden interest in out-of-the-money calls occurs as SLM strengthens its foothold above the $12 level. This region held the shares in check from December 2009 through the first week of March, but SLM settled last Friday firmly atop this stubborn resistance. The $12 level could now switch roles to act as support, providing the stock with a temporary resting place as it waits for support from its 10-week and 20-week moving averages to catch up with its progress.

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Midday Market Check - The Dow Jones Industrial Average Drops 25 Points

We head into the second half of the session with the Dow Jones Industrial Average (DJIA) off its lows but still down 25 points. At its late-morning lows, the blue chip average was down 54 points. The S&P 500 (SPX), Nasdaq Composite (COMP), and Russell 2000 (RUT) are showing moderate losses.

Chart Courtesy of Thomson Reuters

The sector action shows a downside bias. The Amex Biotech Index (BTK) and streetTRACKS Gold (GLD) are the only advancers on my list. The Oil Service HOLDRS (OIH), Natural Gas Index (XNG), US Oil Fund (USO), and PowerShares Clean Energy ETF (PBW) are the weakest areas.

Click here for symbol descriptions

MannKind Corporation (NASDAQ: MNKD) and Baidu, Inc. (ADR) (NASDAQ: BIDU) are among the stocks seeing unusual option volume so far today.

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

MannKind Corp hit headlines this morning and we find the stock trading down 15% here. Total option volume is 4 times the average with 62% of the activity on the call side. Meanwhile, shares of Baidu Inc are up 4% after the talk that Elizabeth Harrow discussed. Option volume on BIDU is twice the norm with the activity split between calls and puts.

Last week ended with a note that the indexes were holding the intermediate-term uptrends but were overbought on a short-term basis. In that context, today's lackluster action doesn't standout. However, you may want to keep an eye out for buyers to step back in. According to some research from Rocky White, triple-witching weeks "have a more bullish performance, with less volatility." Click through to read all the details.

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The Sentiment Behind Zebra Technologies Corp

Zebra Technologies Corp. (NASDAQ: ZBRA) looks to be a potentially interesting situation from the contrarian perspective. The equity is has been rallying steadily for a year but there are few little signs of optimism. Here's a look at the sentiment backdrop.

(Click image to see live data)

The chart below shows the steady pattern of higher highs and higher lows. It also shows that shares of Zebra Technologies have pushed through resistance. Despite this positive price action expectations seem subdued. Heading into today's new high, only 2 of 9 analysts ranked the stock with a buy rating. The Schaeffer's Put/Call Open Interest Ratio (SOIR) has been moving higher, but open interest is light so I wouldn't view that as a major source of skepticism. However, the light open interest also means that few are speculating with call options, which I find encouraging. In other words, few seem to be betting on a big move.

Chart Courtesy of Thomson Reuters

On a short-term basis Zebra Technologies is overbought but the intermediate-term price action looks constructive.

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Front-Month Call Writers Descend on United Therapeutics Corporation

Call volume has popped to 17 times the expected level today on United Therapeutics Corporation (UTHR), with nearly 2,000 of these options changing hands so far. By contrast, the stock was only expected to see about 115 calls cross the tape.

However, the day's uptick in call trading isn't necessarily the result of bullish speculation. The most active strike is UTHR's March 60 call, where 1,635 contracts have traded so far. About 83% of these calls have traded at the bid price, suggesting a strong bias toward selling activity. Since the March 60 call is out of the money by several points, it's unlikely these are liquidations; instead, it seems safe to assume that traders are selling to open new calls at this strike today.

By writing calls at this overhead strike, traders are betting that UTHR will remain pinned below $60 per share through the close of this Friday's trading, when March-dated options expire. If the stock lives up to their expectations, the options will expire worthless, and call sellers will retain the initial upfront premium as their maximum profit.

Today's influx of call writers could be attempting to take advantage of inflated implied volatility on UTHR. The March 60 call currently carries implied volatility of 49.5%, compared to the equity's one-month historical volatility of 27.9%. With option prices looking a little expensive as compared to historical levels, it's an opportune time to sell premium on UTHR.

Plus, there's a solid case to be made for UTHR finishing below $60 per share this Friday. The looming round-number region has capped the stock's rally attempts since mid-January, and could easily continue to act as a technical ceiling during the near term.

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Option Skews - Relatively Heavy Call Activity on eBay Inc, SanDisk Corporation, MGM Mirage

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.

eBay Inc. (NASDAQ: EBAY) is showing some signs of strength as it flirts with breaking the above its congestion zone. The shares are overbought so keep that in mind.

SanDisk Corporation (NASDAQ: SNDK) recently overtook resistance near 31 and has been tagging new highs. It too is overbought but the former resistance should now be viewed as support.

MGM Mirage (NYSE: MGM) continues the intermediate-term consolidation I have been watching. The sentiment profile shows expectations remain subdued.

Companies included in today's scan results: General Electric (GE), Ford Motor Co (F), Microsoft Corp (MSFT), Potash Corp. of Saskatchewan (POT), Micron Technology Inc (MU), Applied Materials (AMAT), Pfizer (PFE), eBay Inc (EBAY), SanDisk Corp. (SNDK), Monsanto Co (MON), MEMC Electronic Materials Inc (WFR), LM Ericsson Telephone (ERIC), Abbott Laboratories (ABT), Las Vegas Sands Corp (LVS), SuperValu (SVU), Archer-Daniels-Midland (ADM), Harley-Davidson (HOG), American Express (AXP), McMoRan Exploration (MMR), MGM Mirage (MGM), Digital River (DRIV), Research in Motion Limited (RIMM), Weatherford International (WFT), EMC Corp. (EMC), Advanced Micro Devices (AMD).

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Option Skews - Relatively Heavy Put Activity on Bank of America Corp, Fannie Mae, F5 Networks Inc, Boston Scientific Corp

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.

The activity on Bank of America Corporation (NYSE: BAC) is relatively mild but it is a change of behavior as we usually see the stock appear on the call skews scan. A look back shows only two other appearances on this scan over the last 6 months.

Fannie Mae (NYSE: FNM) jumped last week on unusually heavy volume and then began to consolidate. The equity has now started to work off a short-term overbought condition.

F5 Networks, Inc. (NASDAQ: FFIV) is interesting as I would consider any skepticism to be counter-trend activity. Shares of FFIV are up 19% this year and show a 52-week gain of 215%.

Any put buys on Boston Scientific Corporation (NYSE: BSX) look to be well timed. The stock is indicated down 17% in pre-open activity.

Companies included in today's scan results: PowerShares QQQ Trust (QQQQ), Freeport-McMoRan Copper & Gold Inc (FCX), Fannie Mae (FNM), Alcoa (AA), Bank of America Corp (BAC), Boston Scientific (BSX), ATP Oil & Gas Corp (ATPG), SLM Corp. (SLM), Best Buy Co. (BBY), Exxon Mobil (XOM), Evergreen Solar Inc (ESLR), Moody's Corp. (MCO), Riverbed Technology, Inc. (RVBD), Gamestop Corp (GME), ARIAD Pharmaceuticals (ARIA), First Solar, Inc. (FSLR), WellPoint Health Networks (WLP), Adobe Systems Incorporated (ADBE), Polo Ralph Lauren (RL), Synovus Financial (SNV), ASML Holding N.V. (ASML), Lexmark International (LXK), F5 Networks (FFIV), Western Digital (WDC), AngloGold Ashanti. (AU).

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Stocks Advancing Amid Heavy Short Interest - Salix Pharmaceuticals Ltd, Red Robin Gourmet Burgers Inc, Cbeyond Inc, Digital River 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.

Salix Pharmaceuticals, Ltd. (NASDAQ: SLXP) did push to the new high that was recently discussed. The stock has since been consolidating the gains.

Red Robin Gourmet Burgers, Inc. (NASDAQ: RRGB) is also showing intermediate-term strength. The shares have been moving steadily higher since the end of last year and are now challenging resistance near 25.

However, not all of the companies making the list have been strong. Cbeyond, Inc. (NASDAQ: CBEY) is rebounding from a new annual low hit last week.

Digital River, Inc. (NASDAQ: DRIV) is hitting overbought readings and the equity has yet to break the downtrend that has been in place since late 2006.

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: ATP Oil & Gas Corp (ATPG), Bronco Drilling Company, Inc. (BRNC), Pacific Capital Bancorp (PCBC), BankAtlantic Bancorp (BBX), Digital River (DRIV), C&D Technologies (CHP), American Axle & Manufact. Holdings Inc (AXL), Conn's (CONN), GLIMCHER REALTY TRUST (GRT), China Medical Technologies, Inc. (CMED), Aeropostale Inc (ARO), General Cable (BGC), Cbeyond, Inc. (CBEY), Red Robin Gourmet Burgers (RRGB), Capitol Bancorp. (CBC), Salix Pharmaceuticals (SLXP), LDK Solar Co Ltd (LDK), Anchor BanCorp Wisconsin (ABCW), Magma Design Automation (LAVA), Synovus Financial (SNV), MercadoLibre Inc (MELI), Swift Energy (SFY), Pacer International (PACR), Lululemon athletica (LULU), Websense (WBSN).

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Stocks Showing Unusually Heavy Volume - Shuffle Master Inc, Clear Channel Outdoor Holdings Inc, OceanFreight Inc, Amylin Pharmaceuticals Inc, Potash Corp. of Saskatchewan

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: Amcore Financial (AMFI), Extreme Networks (EXTR), Quiksilver Inc (ZQK), Capitol Bancorp. (CBC), Pacific Sunwear of California (PSUN), C&D Technologies (CHP), CF Industries Holdings (CF), Hooper Holmes (HH), SuperValu (SVU), Acorn International, Inc. (ATV), Shuffle Master Inc (SHFL), National Semiconductor (NSM), Clear Channel Outdoor Holdings, Inc. (CCO), Plug Power (PLUG), OceanFreight Inc. (OCNF), Amylin Pharmaceuticals Inc (AMLN), Digital River (DRIV), Cbeyond, Inc. (CBEY), RXi Pharmaceuticals Corp (RXII), Golden Star Resources, (GSS), Potash Corp. of Saskatchewan (POT), Zimmer (ZMH), Agrium (AGU), Citigroup Inc (C), Clean Energy Fuels Corp. (CLNE).

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...

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Futures on the Dow Jones Industrial Average Suggest a Flat Open

Good morning everyone - welcome to the beginning of a new trading week. We start the day with stock futures more or less flat. The S&Ps are 2 points below fair value. As they stand now, futures on the Dow Jones Industrial Average (DJIA) are suggesting an opening drop of 15 points.

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