Schaeffer's Option Activity Watch Features Countrywide Financial, Lincare Holdings, and Halliburton.
Schaeffer's Option Activity Watch:
1. According to Hoover's, Countrywide Financial (NYSE:CFC) is one of the largest independent residential mortgage lending firms in the United States. CFC writes, sells, and services prime first mortgages for single-family homes through its subsidiary, Countrywide Home Loans. The financial firm also offers home equity loans and subprime mortgages. As if this isn't enough, CFC is also a broker/dealer of mortgage-backed securities; sells property/casualty, health, and credit insurance, while running Treasury Bank. The bank behemoth runs roughly 600 branch offices in all the states except Vermont.
Yesterday, CFC was rapidly approaching a pessimistic extreme from the Street, thanks to its Schaeffer's put/call open interest ratio (SOIR) percentile ranking of 70. However, the options pits saw 5,445 of CFC's August 40 call (CFC HH) exchanged in yesterday's trading action. This helped push the bank's SOIR to 0.90, which is lower than 55 percent of the readings taken over the past 52 weeks.
Analysts feel that CFC is a stock worth watching, as Zacks shows 16 of the 19 that cover the equity feel it is worthy of a "hold" or better rating. Should this optimistic bunch change its mind, watch for some downside pressure to exert itself on CFC.
Technically, the shares have backed off of a new all-time high of 40.31, set mere days ago. In fact, CFC has dropped below both of its short-term trendlines for the first time in more than a month. However, the last time this happened, the "down time" was minimal. Will this be the case again? It appears that all of the stock's intermediate- and long-term trendlines are prepared to lend support to try and make this slip as painless as possible. What's more, CFC's 10-week moving average is rapidly approaching the 38 level. This could result in double-barreled support for the financial firm as the 38 level may reverse its prior role as resistance for the shares.
Click the following link to see a Weekly Chart of CFC Since August 2003 with 10-Week and 20-Week Moving Averages: http://www.schaeffersresearch.com/wire?ID=13516 .
2. Hoover's tells us that Florida-based Lincare Holdings (NASDAQ:LNCR) is one of the largest providers of oxygen and other respiratory therapy services to in-home patients in the United States. LNCR services roughly 530,000 customers and more than 800 offices in 47 of our great states. LNCR also provides liquid oxygen systems and other respiratory equipment to help patients suffering from chronic obstructive pulmonary diseases and other respiratory ailments. LNCR also provides infusion therapy and rental of such medical equipment as beds and wheelchairs.
Yesterday, LNCR saw 3,844 of its July 40 put (LQN SH) cross the tape. This pessimistic piling pushed LNCR's already-high SOIR to 3.59, which is higher than 96 percent of the readings taken over the past 52 weeks. Analysts tend to agree with this sentiment, as all eight rank the medical supply company a "hold" or worse, according to Zacks. If this dour group changes its feelings toward LNCR, an upside push could be in the works.
Technically, LNCR seems to be a stock that is going to force these bears to hold their breath. Thanks to the support of its 10-week and 20-week trendlines, the good air group was able to hit a new all-time high last month. Since mid-October 2004, LNCR has not closed below this dual support. What's more, the past nine months have not seen the stock dip below the support of its 10-month trendline. Since this trendline has ascended beyond its 10-month trendline, it appears that the bets placed yesterday may find themselves on the losing side of the equation.
Click the following link to see a Weekly Chart of LNCR Since October 2004 with 10-Week and 20-Week Moving Averages: http://www.schaeffersresearch.com/wire?ID=13516 .
3. As oil has run rampant on the market during the past week, I find it no true surprise to find today's final participant in our active options list. The option pits gushed with optimism for Halliburton (NYSE:HAL) yesterday, as 3,048 of the oil company's August 50 call (HAL HJ) were exchanged. This pushed the baron of black gold's SOIR slightly lower, to 0.86. However, this SOIR holds a pessimistic percentile ranking of 88.
While HAL's SOIR reflects pessimism; analyst rankings paint a much different picture. According to Zacks, optimism rules the roost when it comes to the analyst community. Of the 20 analysts that hold coverage on HAL, 16 of them feel that the company is worth a "buy" or better ranking. The remaining four are equally split between "hold" and "sell" rankings. Should this gushing group decide to change its mind on the oil company, watch for HAL to slip.
Technically speaking, it is much easier to understand HAL's popularity with the analysts. Since closing above its 10-month trendline in October 2002, HAL has steadily increased along this staunch support. In fact, only one month has seen the guru of gushers drop below this support. Although the oil stock has backed off of resistance in the 49 region, all of HAL's trendlines are approaching from underneath to lend what support is necessary. Should this support hold and the 50 level fall, watch for HAL to continue its climb. However, it should be noted that the oil pits are a slippery spot right now, and may not be for the faint of heart.
Click the following link to see a Monthly Chart of HAL Since July 2002 with 10-Month and 20-Month Moving Averages: http://www.schaeffersresearch.com/wire?ID=13516 .
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About Schaeffer's Investment Research (www.SchaeffersResearch.com)
Schaeffer's Investment Research, founded by Bernie Schaeffer in 1981, is 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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|Date:||Jun 29, 2005|
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