Schaeffer's Market Observation Features Noble, Sepracor, and UTStarcom.CINCINNATI -- Today's Market Observation features Noble (NYSE NYSE See: New York Stock Exchange :NE), Sepracor (Nasdaq:SEPR SEPR Senior Enlisted Performance Report ), and UTStarcom (Nasdaq:UTSI UTSI University of Tennessee Space Institute ). Schaeffer's Market Observations are market-based reports that provide insight and analysis from a unique and unbiased perspective. Market Observations are published on www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research. To receive a free email notification each time a new commentary is written about one of the featured stocks or any of your favorite stocks, click on the following link: http://www.schaeffersresearch.com/addinfo . Noble Noble (NYSE:NE) offers deepwater oil and gas contract drilling services. The company, with operations in waters off the coasts of five continents, has a fleet of 57 offshore rigs: three submersibles, three dynamically positioned drillships and 13 semisubmersibles, and 38 jack-ups. Many of its units are capable of operating in depths greater than 5,000 feet. The firm also operates eight drilling units under labor contracts in the North Sea and off the east coast of Canada. The security was the focus of some heavy put trading on Tuesday, as open interest at its December 45 strike surged from 1,710 to 4,009 contracts. In fact, pessimism pessimism, philosophical opinion or doctrine that evil predominates over good; the opposite of optimism. Systematic forms of pessimism may be found in philosophy and religion. has been on the rise among options players for some time now. The equity's Schaeffer's put/call open interest ratio (SOIR SOIR Schaeffer's Put/Call Open Interest Ratio SOIR Simultaneous Operations on Intersecting Runways ) has steadily climbed from its August low to its current perch at 1.39, which is higher than all other readings taken over the past year. Meanwhile, short interest sank more than eight percent lower in October to 5.3 million shares. However, with more six percent of the security's total float sold short, the stock may see some short-covering support. On the other hand, Wall Street continues to favor the equity, with 15 of the 21 analysts following NE rating it a "buy" or better. After a brief pullback Pullback A falling back of a price from its peak. This type of price movement might be seen as a brief reversal of the prevailing upward trend, signaling a slight pause in upward momentum. to test support at its rising 10-week moving average, the shares have moved back above their 10-day and 20-day moving averages and through former resistance at the 47 level. In fact, the stock has outperformed the S&P 500 Index since June. With pessimism continuing to build toward the security, NE may still have some room to run as the bears jump on the equity's bandwagon band·wag·on n. 1. An elaborately decorated wagon used to transport musicians in a parade. 2. Informal A cause or party that attracts increasing numbers of adherents: . Click the following link to see a Weekly Chart of NE since May 2004 with 10-Week Moving Average: http://www.schaeffersresearch.com/wire?ID=11571 . Sepracor Options speculators loaded up on Sepracor (Nasdaq:SEPR) options yesterday. The equity's January 50 call added more than 4,800 contracts, while its November 45 call tacked on 3,300 new positions. Puts were also busy, with the security's January 40 put swelling by 3,400 contracts. Overall, open interest on both sides is running neck and neck, with SEPR's SOIR checking in at 1.00. However, this reading is higher than 86 percent of all those taken over the past 12 months, indicating a high degree of pessimism. Furthermore, short interest spiked almost 22 percent over the most recent reporting period to 8.6 million shares. This accumulation of bearish Bearish Words used to describe investor attitude. A bearish investor believes that a particular asset or the market as a whole will decline in value. bearish bets accounts for approximately 10 percent of the stock's total float and would take roughly four days to unwind Unwind 1. The closure of an investment position. 2. The reconciliation of an error previously unseen by a brokerage house. Notes: 1. Sometimes referred to as closing out a position. at the security's average daily trading volume Trading volume The number of shares transacted every day. As there is a seller for every buyer, one can think of the trading volume as half of the number of shares transacted. That is, if A sells 100 shares to B, the volume is 100 shares. . A short-squeeze situation could help to boost the shares sharply higher. The Street is leaning slightly to the bullish Bullish Word used to describe an investor's attitude. Bullish refers to an optimistic outlook, while bearish means a pessimistic outlook. bullish side, with seven "buys," three "holds," and two "sell" ratings. Technically speaking, the stock has declined under its 10-day and 20-day moving averages since mid-September, but is now attempting to rebound off former staunch support at the 42 level. This region is also home to the stock's ascending ascending /as·cend·ing/ (ah-send´ing) having an upward course. ascending progressing to higher levels, usually used in reference to the nervous system. 10-month moving average - a trendline SEPR has not closed a month below since December 2002. Traders should key in on the battle taking place in this region. A breach of resistance at the equity's short-term moving averages could send the bears scrambling for cover, increasing buying pressure on the shares. However, a break below long-term support could spur a fresh round of downgrades from Wall Street. Click the following link to see a Monthly Chart of SEPR since July 2002 with 20-Week Moving Average: http://www.schaeffersresearch.com/wire?ID=11571 . UTStarcom Last night, UTStarcom (Nasdaq:UTSI) announced third-quarter earnings of four cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , slipping past the Street estimate of three cents per share. However, earnings came in well below its year-ago profit of 46 cents per share. Looking ahead, the company expects fourth-quarter earnings to come in at breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations , while 2004 profits are forecast at 76-80 cents per share. Unfortunately, the outlook for both periods fell below the Street estimate. The security gapped lower on the lackluster lack·lus·ter adj. Lacking brightness, luster, or vitality; dull. See Synonyms at dull. Adj. 1. lackluster - lacking brilliance or vitality; "a dull lackluster life"; "a lusterless performance" news, but is attempting to rally back in early trading this morning. From a longer-term perspective, the shares are consolidating into overhead resistance at their declining 20-week moving average. This trendline has capped the security since late January. Despite the stock's weak technical and fundamental backdrop, options players remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op toward the shares. Ahead of the earnings report, investors jumped into the equity's November 20 call, pushing open interest up from 14,417 to 17,644 contracts. What's more, the stock's SOIR of 0.43 is lower than 96 percent of all those taken over the past 52 weeks. On the other hand, short sellers remain convinced that the equity has further downside Downside The dollar amount by which the market or a stock has the potential to fall. Notes: You might hear someone say that the downside on stock XYZ is $10. What that means is that the stock could fall by this amount if things got bad. ahead of it. The number of UTSI shares sold short shot 10 percent higher in October to 13.3 million shares. Not only is this swell of bearish bets more than five times the security's average daily trading volume, but it also accounts for roughly 15 percent of the stock's total float. Wall Street is also skeptical of the firm, with 13 of the 18 analysts following the stock rating it a "hold" or worse. Investors should keep a close eye on the stock's intermediate-term trendline, as another rejection could shake loose the remaining bulls on UTSI. Click the following link to see a Weekly Chart of UTSI since January 2004 with 20-Week Moving Average: http://www.schaeffersresearch.com/wire?ID=11571&obspage=2 . The best way to take advantage of the timely Schaeffer commentaries is to sign up to receive their free e-newsletters -- Opening View, Market Recap and Monday Morning Outlook. Click here to have the Schaeffer's commentaries delivered to you free via email every day. http://www.schaeffersresearch.com/addinfo . About Schaeffer's Investment Research (www.SchaeffersResearch.com) Schaeffer's Investment Research, founded by Bernie Schaeffer in 1981, is a financial information and trading resources company. It publishes Bernie Schaeffer's Option Advisor, the nation's leading options subscription newsletter. The firm's contrarian approach focuses on stocks with technical and fundamental trends that run counter to investor expectations. The firm's website, http://www.SchaeffersResearch.com , is recognized as one of the leading information sources for stock and options traders and was cited as the top options website by both Forbes and Barron's. Click here for more details about Schaeffer's trading methodology: http://www.SchaeffersResearch.com/method . |
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