General Motors Company
) 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
Digging deeper into the data, the stock's 10-day International
Securities Exchange (ISE), Chicago Board Options Exchange (
), 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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