Select Comfort has pulled back after a monster run, and the
bulls are stepping in.
optionMONSTER's Heat Seeker tracking system detected the purchase
of about 2,600 May 30 calls for $1.15 and $1.20. Volume exceeded
previous open interest of 1,872 contracts, indicating new positions
were initiated. The stock rose as the calls traded and finished the
session at its highs.
SCSS rose 4.18 percent to $29.94 on Friday. The mattress maker
almost tripled between early October and mid-April amid strong
demand for its products but fell sharply after a lukewarm earnings
report two weeks ago.
The stock is now attempting to hold support around a key level
where it consolidated in February, which could be leading some
chart watchers to believe that it's still in a bullish uptrend. The
current price area is also roughly where SCSS made its previous
all-time high in 2006.
Luxury mattresses have enjoyed a strong secular growth trend in
recent years as they take market share from traditional
manufacturers such as Sealy. The other big company in the group,
Tempur-Pedic, had also been rallying but cratered on April 20 after
results failed to meet lofty expectations. (See
Overall option volume in SCSS was quadruple its daily average, with
calls outnumbering puts by 38 to 1.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
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