Huge Volume Spike in LED Stocks: It Looks Real This Time (CREE, VECO, AIXG)

Posted in block volume, General, Options  on November 5th, 2011
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On Friday there was explosive volume in the LED stocks on news that China is going to be phasing out larger incandescent bulbs over the next year and smaller bulbs over the next three years.  The volume was three-times and four-times normal in many of these stocks.  What is different about the news is that this could be a game-changing event for the years ahead even if the near-term issues remain.  The lows may have now been seen in these shares and this time the volume spike looks real.

Cree, Inc. (NASDAQ: CREE) closed up 9.65% at $30.57 on nearly 3-times normal volume with 9.3 million shares traded against a 52-week range of $23.03 to $31.34.

Veeco Instruments Inc. (NASDAQ: VECO) closed up 10.15% at $29.20 on about 3.3-times normal volume with 7 million shares traded against a 52-week range of $23.06 to $57.67.

Aixtron SE (NASDAQ: AIXG) closed up 9.97% at $16.43 on more than 4-times normal volume with 2.11 million shares traded versus a 52-week range of $12.49 to $44.96.

The full analysis, details of the phase-out, and 4 or 5 other LED shares on the move are available here at 24/7 Wall St.  A Veeco stock chart from stockcharts.com has been provided below.  Stock option trading was also extremely elevated in all three names, particularly in the speculative call options.

JON C. OGG

Chart Damage in Apple on Above-Average Volume (AAPL)

Posted in General  on June 16th, 2011
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Apple Inc. (NASDAQ: AAPL) has been the greatest growth story of the last decade.  It has also been the greatest product company of the last decade.  But now it is a company fighting wars on many fronts, and the iPad and iPhone are actually competing for business of Mac sales.  You already know that.  What matters is that Apple’s stock chart had a technical violation as the stock took out its 200-day moving average.  Apple has traded lower than where it traded today, but this is the first 200-day moving average violation in quite some time.

The 200-day moving average is $325.55 and the 50-day moving average is $339.34.  Google just closed today at $325.16 on above average trading volume of more than 18 million shares and its 52-week trading range is $235.56 to $364.90.

We previously noted ten reasons why Apple won’t pay a dividend any time soon.

Maybe you can use a tie-in for the Horsemen stocks of technology… Google is exhibiting severe chart weakness and it broke under $500 for the first time since last year.

JON C. OGG

3-year chart provided by stockcharts.com:

Sizing Up Express-1 (XPO, URI)

Posted in General  on June 15th, 2011
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It is rare to see a day-two run on massive volume that grows even more than on the day the news came out, but that is what we are seeing today in shares of Express-1 Expedited Solutions Inc. (AMEX: XPO).  We wanted to dig in here to see if the run can continue.

Late in the day on Wednesday we have already seen over 1.47 million shares trade and the gain is almost 16% at $2.94.  Shares also hit a new 52-week high today and the new range for the last year is $.19 to $3.13.  This appears to actually have been new all-time highs.

On Tuesday, June 14, 2011, Express-1 shares closed at $2.53 on 600,400 shares versus a $2.19 close on Monday.

What is odd is that even after the huge move, the market cap is only about $96 million.

What kicked off the move was a private equity firm’s founder taking over as CEO.  Reuters reported on Tuesday, “Entrepreneur and investor Bradley Jacobs and his private equity firm are to invest $150 million in Express-1 Expedited Solutions Inc., a third-party logistics provider, and aim to build “a multibillion-dollar” business over the next several years.”

United Rentals, Inc. (NYSE: URI) was founded by Bradley Jacobs and the hope is that he can create a repeat performance.

More details and a full background are here.

JON C. OGG

3:30 PM EST

Odds-Making: Is Brocade Really Bait For Dell? (BRCD, DELL, CSCO, HPQ)

Posted in General  on June 2nd, 2011
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Brocade Communications Systems, Inc. (NASDAQ: BRCD) is seeing a price and volume spike this morning after an analyst named Paul Mansky at Canaccord Genuity noted that Dell Inc. (NASDAQ: DELL) should acquire the company.  Our own take is that Brocade should have already been acquired, but here it remains an independent company and Cisco Systems Inc. (NASDAQ: CSCO) and Hewlett-Packard Co. (NYSE: HPQ) continue to pose threats.

The research causing the spike noted the following:

  • Dell has been busily assembling a full IT stack aimed at re-aligning the company away from secularly less attractive legacy businesses (e.g., PC) and incrementally toward future growth in the enterprise.
  • With Dell’s acquisitions of EqualLogic, Perot and Compellent (among others), Dell now has a beach head in three of the four primary layers of this stack – storage, servers and services.
  • Networking is the one crucial piece that is missing, but Dell has some limited networking technology in-house.
  • Dell has clearly been seeing success cross-selling Ethernet switching with servers and storage
  • The company has $7B of net cash on hand prior to any additional raise, equal to 23% of its market cap.

The most important note is, “Not owning this technology puts Dell at risk of simply hopping from one commoditized business into another.” Still, the analyst noted that he has no knowledge of any discussions between or around Dell and Brocade, nor does he suggest that there are any discussion he is unaware of.

The research call is driving Brocade today.  At 11:10 AM EST shares are up 5.1% at $7.01 and shares hit a new 52-week high today at $7.20.  We have seen about 225% of normal trading volume as there have already been about 23.1 million shares traded and the day is not even half-way done.

Normally we would not cover one research report in detail.  The reason we do is that we have believed Brocade would be a target for many companies that want to stave off competition from Cisco, H-P, and a half-dozen other players.

If we had to make odds over any company which could or should acquire Brocade, Dell would be at the top of the list of companies which could benefit from such a deal.

JON C. OGG

Volume Spike Analysis in Broadwind Energy (BWEN)

Posted in General  on May 23rd, 2011
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Broadwind Energy, Inc. (NASDAQ: BWEN) has had a rough year as the wind power sector is just facing the equivalent of “no-wind” on the financial side.  Shares were at $1.66 this morning after a $1.76 close on Friday and the 52-week trading range is $1.21 to $3.88.

Now this morning came news that The U.S. Department of Energy has selected Broadwind for a “multi-megawatt dynamamoter upgrade.”  It turns out that this is a $1.37 million award for the design and fabrication of a 5.8 mega-watt wind turbine gearbox for a dynamamoter at its National Wind Technology Center. 

Volume had been light but at 11:03 EST came the news story and at 11:12 AM EST we have shares up only about 1.7% at $1.79.  What is important is that shares first popped up by more than 8% to a high of $1.93.  We have now just surpassed 1.6 million shares and avaerage volume for a full day is only 1.2 million shares.

The news is important on the volume side, but the size of the contract is not likely going to be a real driving force as Thomson Reuters sees over $192 milliuon in revenues in 2011 and over $213 million in revenues in 2012.

JON C. OGG

Weekend Review of Unusual Options Trading (ACOR, CAAS, GME, HK, S, TEVA, VVUS)

Posted in Options  on May 21st, 2011
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Each Saturday we usually try to do a review of some unusual options trading at the end of the week.  With Friday being expiration date, that can always mask some of the larger trades.  We tracked unusual options trading in shares of Acorda Therapeutics, Inc. (NASDAQ: ACOR), China Automotive Systems Inc. (NASDAQ: CAAS), GameStop Corp. (NYSE: GME), Petrohawk Energy Corporation (NYSE: HK), Sprint Nextel Corp. (NYSE: S), Teva Pharmaceutical Industries Limited (NASDAQ: TEVA), and in VIVUS Inc. (NASDAQ: VVUS).
 
Acorda Therapeutics, Inc. (NASDAQ: ACOR) was truly an anomaly.  Stories that European Medicines Agency recommended approving Fampyra for MS patients, and with Biogen Idec Inc. (NASDAQ: BIIB) having European drug rights actually have some thinking a takeover is likely.  The stock traded up over 13.7% to $30.38 on 5.5-times normal trading volume of almost 5.4 million shares.  So think about this, like the options players were yelling “Don’t Do It!”: Not a single contract series that expired on Friday for May, nor June, July, or another month saw even 1,000 CALLS trade in a single contract strike price.

China Automotive Systems Inc. (NASDAQ: CAAS) is one that we are not going to opine about because of the issues coming out of so many Chinese companies.  Shares are at $8.04 and we saw 1,116 of the JUNE-2011 $5 PUTS trade hands.  Sound too small? The open interest was only 203 contracts.

GameStop Corp. (NYSE: GME) saw unusual trading roll out in June 2011 with some 7,720 contracts trade against the open interest of 2,920 contracts in the JUNE $28 CALLS.  There were also 1,000 CALLS traded in each of the $29 and $30 strikes for September.  This one has been on a tear as investors started to snap this one back up off the floor. This was under $20.00 as recently as mid-March.

Petrohawk Energy Corporation (NYSE: HK) saw some elevated trading in the JUNE $25 and $26 CALLS with over 9,000 contracts each. This appears to be more bets on the success of the new shale play. Interestingly enough, The $24 PUTS had over 10,000 contracts trade as well versus open interest of 27,259 contracts.

Sprint Nextel Corp. (NYSE: S) showed up as most active in calls with over 100,000 traded.  It looks nothing more than a rolling out of a spread-bet on the $5.00 CALL and $5.50 CALL Strike Prices.  Combined, the two trades were almost 70% of interest in JUNE. 

Teva Pharmaceutical Industries Limited (NASDAQ: TEVA) is having a hard time getting up off the ground even as Big Pharma stocks have been making a comeback.  It looks like we saw seeing naked or covered call writing with over 23,000 of the MAY-2011 $42.50 CALLS with a last trade of $7.20.  Earlier in the week was a huge close-out trade in the MAY-2011 $45.00 CALLS.  This was on options expiration date, so there was a premium capture trade.

VIVUS Inc. (NASDAQ: VVUS) saw unusual options trading with over 3,000 of the SEP-2011 $8 CALLS versus an open interest of 4,465 contracts; there were also over 4,600 of the SEP-2011 $10 CALLS versus an open interest of only 2,008 contracts.  No balancing trades with PUTS were seen.  This is a bet on Qnexa with shares at $8.81.

You are invited to join our free daily email distribution list from 24/7 Wall St. to hear more about options trades, analyst upgrades and downgrades, top day trader and active trader alerts, dividend trends, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more. 

JON C. OGG

Volume Spike Analysis in Penson (PNSN)

Posted in General  on May 12th, 2011
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Penson Worldwide Inc. (NASDAQ: PNSN) is experiencing a massive volume spike for the second day in a row that marks a third day down.  We have no data indicating this, but the extreme volume spike with lower prices in the securities clearing and processing firm is looking very similar to what we saw when major brokerage firms were rumored to be imploding back in 2008.  Again, we have not heard any rumors that Penson is facing these issues in a real manner and we also do not want to fuel any rumors as they can be unfairly devastating to a firm.

A call has been placed to get to the bottom of this issue and we are awaiting a call back from company representatives. 

There are online messages and chats about municipal bond accounting, but this is very vague and it may not even be a financial issue in reality.  Sandler O’Neill cut its price target to $4.50 from $5.50 and maintained a “Hold” rating per CNBC data earlier this morning.  The move today and this week is certainly worse than just an analyst downgrade.    

Just on Tuesday this was above $5.00 with a drop of $0.29 to $5.16 on elevated volume compared to recent days.  On Wednesday this hit 2.26 million shares and the stock fell to $3.393.  Today we have a 21% loss to $3.05 on almost 4 million shares as of 12:30 PM EST.

Average volume is only 120,000 shares and this is an extreme reading.  Most trading days this does not even trade 100,000 shares.  Shares hit a new 52-week low today and the 52-week trading range is now $2.73 to $8.09.

For now, we are simply awaiting more data for clarity.

UPDATE at 3:30 PM EST: A clarification statement has been issued by Penson and shares were halted at 3:17 PM EST.  Full detail at 247wallst.com.

JON C. OGG

Interest in Nuance Resurfaces (NUAN, AAPL, GOOG, MSFT, ADBE)

Posted in General  on May 9th, 2011
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Nuance Communications, Inc. (NASDAQ: NUAN) has just seen a massive jump on rumors that Apple Inc. (NASDAQ: AAPL) is in talks “of an unknown nature” as per reports from the blog TechCrunch.  MarketWatch noted this is likely a licensing deal for its speech recognition software.

For whatever this is worth, we have considered that Nuance could ultimately be acquired.  The problem in thinking that Apple would acquire is that this Dragon NaturallySpeaking software is used on so many Windows machines. 

Speech-to-text and text-to-speech are likely to only grow.  Our take is that ultimately Nuance will be acquired.  The three acquirers we had considered as possible acquirers came to a tie between Microsoft Corporation (NASDAQ: MSFT) and Google Inc. (NASDAQ: GOOG) followed in a distant third place by Adobe Systems Inc. (NASDAQ: ADBE).  The problem is that Nuance is getting pricey on a nominal dollar basis.

After a 10% pop to $22.00 and with just over 4 million shares traded already this morning, the market cap is now $6.6 billion.  The new 52-week range just went higher today and that is $14.45 to $22.93.  The average daily volume is about 2.35 million shares per day.

JON C. OGG

(10:17 AM EST)

The Alcoa Buyout Rumors (AA)

Posted in General, Options  on May 3rd, 2011
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Alcoa, Inc. (NYSE: AA) is up today on buyout rumors, but there are some concerns that these may be overblown. Rio Tinto is the supposed bidder here… Shares have already doubled normal trading volume and then some with over 52 million shares traded as of 1:10 PM EST versus an average volume of about 25 million shares.  The gain is by 2.85% at $17.71. 

Some commentary came from CNBC that the rumors are first off called unbelievable and second that rumors of a third party financing have been refuted.  We would also throw in that the consensus analyst price target is $20.26 from Thomson Reuters.

Where we cannot refute a development is in the stock options trading. The May 2011 expiration date is MAY 20, 2011 and we have seen the following trading in Calls alone against the open interest:
CALL$ Vol.  OpInt
16.00 1,155 13,620
17.00 9,037 31,968
18.00 48,745 46,024
19.00 26,660 10,802
20.00 46,826 12,514
21.00 5,927 809
22.00 8,950 329

Just keep in mind taht Alcoa was a $30 an

JON C. OGG
1:10 PM EST

Weekend Review: Unusual Options Trading Review (AMR, CSTR, SLV, SFI, MSFT, SPPI)

Posted in Options  on April 30th, 2011
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It is Saturday and we decided to go dig through the Friday options trading looking for unusual trading in the crazy world of stock options.  Some of these are probably just par for the course but two stood out as really unusual.  We outlined the options trading and gave color in the following: AMR Corporation (NYSE: AMR), Coinstar Inc. (NASDAQ: CSTR), iShares Silver Trust (NYSE: SLV), iStar Financial Inc. (NYSE: SFI), Microsoft Corporation (NASDAQ: MSFT), and Spectrum Pharmaceuticals, Inc. (NASDAQ: SPPI).  More details on each below…

AMR Corporation (NYSE: AMR), the parent of American Airlines, saw large trading in the LEAPS… The JAN13 $3.00 PUTS saw some 8,697 options contracts trade hands.  Keep in mind that the open interest is 44,248 contracts.  The stock saw a 2% gain but the closing price was $5.87.

Coinstar Inc. (NASDAQ: CSTR) saw its stock close up 5% at $53.98 after earnings allowed shares to run, but the MAY11 CALL and PUT volume much higher.  Here is the MAY standout strike prices:
CALL$ Vol. OpInt.
50.00  5,865  11,178
52.50  995    7,161
55.00  9,614  14,394
57.50  2,926  1,788
60.00  2,467  1,600
PUTS$ Vol.  OpInt.
45.00  2,205  6,803
47.50  7,536  7,740

iShares Silver Trust (NYSE: SLV) is getting out of hand.  Stock volumes are now trading more than the whole float and the MAY11 CALLS traded nearly 150,000 CALLS on Friday versus about 100,000 MAY11 PUTS… Unfortunately, as long as silver remains the new crack for speculators then this options activity is just likely to stay high.

iStar Financial Inc. (NYSE: SFI) is one we never recall with highly unusual options trading.  This one saw 28,676 contracts trade in the JAN12 $10.00 CALLS and the prior open interest was only 19,501 contracts.  This was on the heels of it reporting its first real profit in three years.  Shares closed up 2.1% at $9.62 on 3.5 million shares versus a 52-week range of $2.70 to $10.48 and against average daily volume of almost 1.5 million shares.

Microsoft Corporation (NASDAQ: MSFT) is no longer known for its great price volatility.  Options traders were braced for a move of just under $1.00 in either direction and shares closed down $0.79 at $25.92 on Friday on more than 319 million shares traded. We saw more than 18,000 contracts of the MAY11 $25.00 CALLS trade hands, almost 67,000 of the MAY11 $26.00 CALLS trade hands, and more than 36,000 of the MAY11 $27.00 CALLS trade hands.  With more than 10,000 contracts traded in other strike prices, there were more than 130,000 CALLS traded. That is about 3:2 in call call volume over total put volume.  Despite a drop and despite caution and despite a value trap, there are still those who want to be bullish.

Spectrum Pharmaceuticals, Inc. (NASDAQ: SPPI) saw a drop of 13% to $9.00 on more than 7.4 million shares, but this was ahead of the FDA decision.  The headlines show that FUSILEV won FDA approval for colorectal cancer.  Here were the options trades for MAY11 alone, and look for many more on Monday:
CALL$ Vol. OpInt.
9.00   1,514 6,544
10.00   3,748 5,681
11.00   6,386 7,519
12.00   1,465 2,929
13.00   1,190 1,196
PUTS$ Vol. OpInt.
6.00   1,182 3,650
7.00   3,045 6,181
8.00   3,599 6,291
9.00   1,315 3,914
10.00  1,068 1,900