General Motors Company
(NYSE:GM) has been a technical standout over the past year, sporting a 52-week gain of more than 32%. On a more recent note, the stock has outperformed the broader S&P 500 Index
(INDEXSP:.INX) by close to 8 percentage points during the last two months, and tagged a new multi-year high of $30.97 during the course of yesterday's session. Meanwhile, the equity continues to trade above its 20-week moving average, which has acted as support since last August. Not surprisingly, optimism is running hot toward the automaker, as it gears up to report quarterly earnings tomorrow.
Digging deeper into the data, the stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio sits at 4.96, indicating traders have bought to open nearly five calls for every put during the past two weeks. This ratio ranks higher than 81% of similar annual readings, meaning speculators have been picking up calls over puts at a faster-than-usual pace.
As a result, Schaeffer's put/call open interest ratio (SOIR) for GM checks in at 0.50, with calls doubling puts among options due to expire in the next three months. This ratio ranks in the 32nd percentile of its annual range, reflecting a stronger-than-usual preference for short-term calls over puts lately.
However, there are still a few holdouts in the security's bearish camp. Short interest on GM rose by 2.3% during the most recent reporting period, and now accounts for almost 12% of the equity's available float. It would take more than a week to unwind these bearish bets, at the stock's average pace of trading. Should the equity maintain its current upward trajectory, it could spark a short-covering rally in the near term.
Meanwhile, sentiment among the brokerage bunch mirrors the predominantly bullish attitude toward General Motors Company. The stock currently boasts eight "strong buys" and two "buy" endorsements, compared to four "holds" and one "sell" suggestion. What's more, the equity's average 12-month price target of $35.12 denotes a premium of nearly 14% to its present price of $30.84.
GM is on deck to reveal first-quarter earnings on Thursday, and has exceeded analysts' bottom-line expectations in six of the past eight quarters. However, the day after posting results, the stock has traded 1% lower on average, and has typically been down about 1.3% a week later. For the first quarter, analysts are forecasting a profit 54 cents per share.
This article by Terri Stridsberg was originally published on Schaeffer's Investment Research.
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