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New Annual Lows: Cypress Semiconductor, Safeway, and Knight Capital Group


All three dropped to new annual lows today.

The market has had a problem committing to a direction today, dropping in early trading, then surging into the lunch hour before again visiting the breakeven point. Only time will tell whether bulls or bears will win this tug-of-war. New highs are solidly outpacing new lows, at least, as the NYSE has seen just 21 stocks reach new nadirs today, while the Nasdaq new-low list is home to just 25 names. Among the equities sliding to new lows are Cypress Semiconductor Corporation (CY), Knight Capital Group Inc. (KCG), and Safeway Inc. (SWY).
  • Cypress has dropped to its lowest point in almost two years, hitting the $11.06 level in mid-afternoon trading. Spurring this pullback was this morning's news that Cypress profit dropped 88% during the past year. The stock's own year-over-year drop is roughly 47.3%, while its year-to-date deficit stands close to 34%. Analysts collectively remain optimistic toward the stock, however, as 57% of the 14 brokerage ratings on the stock are of the "buy" or "strong buy" variety.
  • After suffering a downgrade at KBW, Knight Capital shares plunged to a new multi-year low of $10.18 shortly after the open. The stock glanced above breakeven shortly before the lunch hour, but is now solidly back in the red, adding to its year-to-date loss of 13.2%. Short sellers have bet against the stock of late, as more than 8% of the stock's float is sold short. At Knight's current average daily volume, it would take more than a week to cover these shares, although with the stock at new lows, a short-covering rally seems less likely.
  • Grocery stocks haven't been lighting the Street on fire of late, and Safeway said today that second-quarter earnings slid 16% lower amid rising fuel costs and weak consumer confidence. The stock dropped to a new 16-year low of $14.73 in mid-morning trading, but has fought its way back above the $15 level. In 2012, the shares have given back 35% of their value while facing resistance from their 40-day moving average. Some options speculators bet on the wrong horse, as Safeway's call/put volume ratio during the last 10 days stands at 1.36. In other words, options players have bought to open 136 calls for every 100 puts on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio is in the top two-thirds of the past year's worth of readings, suggesting call buying has picked up of late.
Today's new high list includes a look at Skyworks Solutions Inc (SWKS), which has parlayed its earnings into a new annual peak.

This article by Beth Gaston was originally published on Schaeffer's Investment Research.

Below, find some more great content from Schaeffer's Investment Research:

Optimism Grows As Walgreen Stares Down Resistance

Last-Minute Traders Gamble on J.C. Penney

New Annual Highs: Skyworks Solutions, Union Pacific, and U.S. Bancorp

Twitter: @schaeffers
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