Today's "Upon Further Review" from Schaeffer's Investment Research focuses on Abbott Laboratories (NYSE:ABT), Bank of America (NYSE:BAC), Knight Capital Group (NASDAQ:NITE), and Walt Disney (NYSE:DIS). "Upon Further Review" is a report that analyzes newsworthy stocks that are generating a lot of attention on Wall Street. "Upon Further Review" is published on www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research.
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Upon Further Review:
Abbott Laboratories: This morning, Abbott Laboratories (NYSE:ABT) greeted the Street with an earnings report that beat the consensus estimate and lifted its guidance for the rest of the year. The stock has rallied nearly three percent this afternoon on the report, sending the shares through former resistance at the 45.50 level. What's more, it appears that expectations were a bit on the low side heading into this report. On Tuesday, the stock's July 45 put and August 45 put both saw a sizeable pop in open interest, while calls were relatively quiet. What's more, the equity's put/call open interest ratio has increased from 0.43 on July 17 to its current reading of 0.55. This steady rise in the ratio indicates that speculators have added puts at a faster pace than calls among near-term options. ABT should see continued gains as the last of the bears finally jump on the security's bandwagon.
Click the following link to see a Daily Chart of ABT since December 2005: http://www.schaeffersresearch.com/wire?ID=16445
Bank of America: Much like ABT, Bank of America (NYSE:BAC) reported strong earnings this morning. However the equity continues to be hindered by resistance at the 50 level. The stock has consolidated sideways since late April below this round-number level. What's more, it is the site of peak call open interest in the July and August series, with a total of more than 95,000 contracts. The shares may soon find themselves squeezed between support at their rising 20-week moving average (at the 47 level) and the 50 region. It appears many are banking on the stock's long-term uptrend holding up. Yet, traders may want to keep an eye on BAC's 20-week trendline. A breakdown below this level could signal additional losses in the stock's future.
Click the following link to see a Weekly Chart of BAC since September 2005 with 20-Week Moving Average: http://www.schaeffersresearch.com/wire?ID=16445
Knight Capital Group: Knight Capital Group (NASDAQ:NITE) reported strong earnings this morning, surprising the bevy of short sellers who had flocked to the equity's side. In June, short interest shot 41 percent higher to a two-year high of 12.8 million shares. This accumulation of bearish bets accounts for roughly 13 percent of the security's float and is nearly seven times the stock's average daily trading volume. This morning's gap higher continues to find fuel as these bears rush out to buy back their pessimistic positions in an effort to stem their losses. At last check, NITE was up more than 13 percent.
Walt Disney: I thought I would visit Walt Disney (NYSE:DIS) one last time before July options expire on Friday. The company announced last night that it is restructuring operations, aiming to shift toward more Disney-branded movies, in a move that will reduce its worldwide workforce by 650 positions. Investors seem happy with the news, as the shares are up more than one percent in midday trading and are once again approaching the 30 level. The 30 strike remains the site of peak call open interest in the July series, with approximately 29,000 contracts. Until these contracts expire at the end of the week, it's likely that the shares will remain locked in the region. For just a bit of history, when June options expired on June 23, the stock hit a high of $29.28 and a low of $28.86 before closing at $29.12. Peak June call open interest was ... you guessed it ... the 30 strike, with nearly 30,000 contracts. DIS might catch a break in August, as the 30.
Click the following link to see a Daily Chart of DIS since February 2006: http://www.schaeffersresearch.com/wire?ID=16445
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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.