Wednesday's rally was dismissed after Fed Chairman Bernanke's statement was released. "Clearly the fiscal cliff is having effects on the economy," said Chairman Bernanke, referring to the combination of expiring tax cuts and scheduled spending cuts set to begin early next month. "This is a major risk factor right now."
NASDAQ closed down with a 0.28% loss and Dow Jones closed with a minor 0.02% decline. S&P 500 managed to close with a small gain of 0.04%. PowerShares QQQ Trust ETF (QQQ) managed to close above its 50-day MA and ended the day at $65.83. SPDR Dow Jones Industrial Average ETF (DIA) is still well above its 50-day MA by closing at $132.51. SPDR S&P 500 ETF (SPY) also stayed above its 50-day MA and closed at $143.51. Consumer cyclical sector led all the sectors with 0.78% gain while consumer non-cyclical sector declined the most with 0.35% loss.
For NYSE, 1,481 stocks advanced, 1,580 declined, and 94 stayed neutral. For NASDAQ, 981 stocks advanced, 1,503 declined, and 110 stay unchanged. Top 3 stocks with unusual put activities on Wednesday had been identified and will be presented for investors to research further.
Average Put Volume
Daily Volume Ratio
Joy Global Inc. (JOY)
Williams Companies, Inc. (WMB)
United States Steel Corporation (X)
Source: Schaeffer's Research
Joy Global Inc.
On Wednesday, JOY announced Q4, 2012 earnings. JOY reported adjusted earnings of $1.99 per share, compared with $1.83 per share in the fourth quarter of 2011. The results were 9 cents higher than the Zacks consensus estimate of $1.90 for the quarter. As reported from Zacks, "Fiscal 2012 adjusted earnings of Joy Global were $7.18 per share, compared with $5.92 per share in fiscal 2011. The results of the company were ahead of the Zacks Consensus Estimate of $7.10 for the fiscal year. GAAP earnings per share for the fourth quarter were $1.99 and for the fiscal were $7.13. The difference between GAAP and operating earnings in the fiscal year emanated from the impact of discontinued operation." JOY expects revenue to range from $4.9 billion to $5.2 billion for fiscal 2013 with EPS to range from $5.90 to $6.50, which was below analysts' estimates of $5.21 billion revenue and $6.73 EPS.
The most active put was Jan. 18, 2013 at the strike price of $55.00 with the volume of 5,904 and an open interest of 4,805. The implied volatility is 40.1, and the chance of breakeven is 21.73. This is followed by Dec. 13, 2013 put at the strike price of $57.5 with the volume of 4,275 and an option interest of 560. The implied volatility is 38.7, and the chance of breakeven is 9.27. On the call side, the most active call is Dec. 13, 2012 call at the strike price of $60.00. The volume was 4,544 with an open interest of 2,236. The implied volatility is 35.6, and the chance of breakeven is 35.58. The historical volatility for JOY is 29.03 for 1 month, 36.85 for 3 months, and 41.48 for 1 year.
Williams Companies, Inc.
WMB is a large pipeline company that owns and operates 15,000 miles of interstate gas pipeline, and process around 10% of U.S. gas production. According to the news from briefing.com, WMB priced 46.5 million share public offering of common stock at $31.00 per share.
WMB closed at $31.13 with a 0.80% loss on Wednesday. As seen from the chart below, WMB closed below its 200-day MA of $31.27 Wednesday. The MACD (12, 26, 9) had been showing a bearish sign since Dec. 10 and the MACD difference continued to diverge. RSI (14) is showing an increasing selling momentum at 38.02. WMB is technically bearish.
The most active put was Dec. 21, 2012 at the strike price of $30.00 with the volume of 27,493 and an open interest of 27,599. The implied volatility is 29.9, and the chance of breakeven is 19.59. The historical volatility for WMB is 21.82 for 1 month, 22.51 for 3 months, and 22.62 for 1 year.
United States Steel Corporation
U.S. Steel is an integrated steel producer with nearly 30 million tons of steelmaking capacity producing flat-rolled tubular products in North America and Central Europe, as well as producing coke and iron ore and engaging in rail and barge transport services. X had its price target cut to $30 from $31 by UBS before the opening bell on Wednesday.
X closed at $22.16 with a 1.12% loss. The volume of 11.12M was 46.90% higher than the 30 day average of 7.57M. X has a relatively higher beta of 2.39. As seen from the chart below, X touched its 200-day MA of $22.70 but failed to close above it. The MACD (12, 26, 9) is showing a bullish trend; however, the MACD difference was not diverging. RSI (14) also pulled back to 56.81. If X fails to break above its 200-day MA, the next support will be its 50-day MA of $21.26.
The most active put was Jan. 18, 2013 at the strike price of $22.50 with the volume of 29,909 and an option interest of 19,671. The implied volatility is 40.3, and the chance of breakeven is 38.65. The historical volatility for X is 31.96 for 1 month, 38.93 for 3 months and 59.93 for 1 year.
Note: All numbers/prices are quoted from the closing of December 12, 2012 with the data provided from Barron's, MorningStar, Schaeffer's Investment Research, Inc., Google Finance, and Yahoo! Finance. Investors and traders are recommended to do their own due diligence and research before making any trading/investing decisions.