Schaeffer’s Option Activity Watch Features Siebel Systems, Integrated Device Technology, and Harrah’s Entertainment
CINCINNATI — Today’s Schaeffer’s Option Activity Watch Features Siebel Systems (NASDAQ:SEBL), Integrated Device Technology (NASDAQ:IDTI), and Harrah’s Entertainment (NYSE:HET). The Option Activity Watch is a report that takes a closer look at three equities appearing in our most unusual option activity report from the previous day. The Option Activity Watch is published on www.SchaeffersResearch.com – the home of Bernie Schaeffer and Schaeffer’s Investment Research. For additional information about this report or to have it delivered to you free via email every day click on the following link. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROAW1M&PAGE=1 .
Schaeffer’s Option Activity Watch:
1. According to Hoover’s, Siebel Systems (NASDAQ:SEBL) is a leading provider of customer relationship management (CRM) software that automates the sales and customer-service operations of large corporations. SEBL’s products allow companies to distribute customer information to call centers, direct sales teams, resellers, retailers, and Web-based sales forces, supporting such functions as marketing, sales, and customer service. Today, WorkForce Software announced that it has chosen SEBL CRM OnDemand over salesforce.com for its hosted CRM solution. Additionally, EDS announced that it has deployed Siebel 7.8 to help the company manage its business process and technology outsourcing business. EDS was a beta customer for Siebel 7.8 and is the first SEBL customer to go live with the new CRM solution.
Today, SEBL finds itself on our most-active options list thanks to heavy activity on its August 10 call (SGQ HB) and its July 10 call (SGQ GB). The two contracts saw open interest of 12,558 and 4,573 respectively, quite a bit of an optimistic explosion. This action pushed the software firm’s Schaeffer’s put/call open interest ratio (SOIR) down to 0.16, which is lower than 93 percent of the readings taken over the past 52 weeks. What’s more, this SOIR is approaching the company’s one-year low of 0.14. Watch for this mark to give way should optimists continue to pile into SEBL positions after this morning’s news.
While SEBL is the darling of the options pits, it is not quite the apple of the analysts’ eyes. According to Zacks, three analysts feel the software company is worthy of “buy” or better, one feels a “sell” is warranted, and three deem SEBL a “strong sell.” Ratings of this sort basically equal each other out, although the “strong sells” carry a little bit more pessimistic weight. What astounds me is the massive amount of “holds” that exist, 22 of them to be exact. This sizeable gathering of fence-sitters could move SEBL either way should they change their minds. However, a “hold” rating more than likely becomes a “buy” or better rating, so we view this as a slightly bullish attitude from analysts.
Turning to SEBL’s technical performance, the CRM specialist could use a little technical CPR. Currently, the only trendline that SEBL is outperforming is its 10-day moving average. This is the first time that SEBL has been able to break the resistance of this trendline since the middle of May. Since that time, SEBL’s 10-day trendline has bearishly crossed its 20-day counterpart and continues southward. What’s more, the company’s 20-day trendline lurks above to push the stock lower should it try to rally.
The Street’s love with SEBL combines with the sultan of software’s lackluster performance to result in a Schaeffer’s Equity Scorecard ranking of 3.0 out of a possible 10.0. The Scorecard is available with several filters for your sorting pleasure on Schaeffer’s Gold, but the fun doesn’t stop there. With your Schaeffer’s Gold membership you have access to exclusive commentary from Bernie Schaeffer and a real-time market blog monitored and conducted by Nick Perry.
Click the following link to see the Equity Scorecard and Daily Chart of SEBL with 10-Day and 20-Day Weekly and Daily Moving Averages since April 2005: http://www.schaeffersresearch.com/wire?ID=13498 .
2. As the company’s name, Integrated Device Technology (NASDAQ:IDTI), sounds much more technical than I could ever hope to be; I decided to consult Hoover’s for a description of the firm. Quickly, I find that it was the right move for me. IDTI produces “many hundreds” of high-performance semiconductors and modules, primarily for the networking and communications markets, but also for other computer and computer peripheral applications. A great deal of IDTI’s sales come from its communications and high-performance logic products, including processors, specialized memories, logic and clock management products, and chipsets for networking gear. IDTI’s top customer, accounting for nearly one-quarter of its sales is Cisco Systems (CSCO). IDTI finds itself the target of our Option Activity Watch wrath today thanks to the 6,000 August 12.5 call (ITQ HT) contracts that crossed the tape on Friday. This moved the company’s SOIR to its lowest point, 0.16, in the past 52 weeks.
On June 16, IDTI announced that it had agreed to buy its rival, Integrated Circuit Systems (ICST) for roughly $23.54 per share. This news was greeted by a resounding thud. The stock gapped lower, which continued its recent suffering under its 10-day moving average. What’s more, this gap pulled IDTI’s 10-day moving average into a bearish cross of its 20-day cohort, signaling the possibility of a continued downtrend. This is compounded by the fact that IDTI is currently finding resistance from its dual monthly trendlines, which have played this role since March 2004. What should concern those who have bet that IDTI will move above the 12.50 or 13 level is the fact that the firm’s 20-month moving average is currently in the 13 region and is in full-fledged descent mode.
If it is possible, analyst sentiment toward IDTI makes the networking firm’s sentiment backdrop rosier. According to Zacks, nine analysts wearing rose-colored glasses feel IDTI deserves “hold” or better rankings. The remaining two analysts believe IDTI is worthy of “sell” ratings. Analyst ratings with this positive of an outlook can only move one way, down.
The only hint of pessimism comes in the form of a 46.42-percent increase in short interest toward IDTI during the past month. However, the prince of peripherals still sees unprecedented love from the options pits despite its technical hang ups during the past year. This results in the company receiving a Schaeffer’s Equity Scorecard rating of an ultra-bearish 1.5 out of a possible 10. A Scorecard rating this low indicates that the downtrend could just be starting.
Click the following link to see the Equity Scorecard and Monthly Chart of IDTI with 10-Month and 20-Month Moving averages since January 2004: http://www.schaeffersresearch.com/wire?ID=13498 .
3. I don’t think it’s a big gamble to assume that most of you have heard of Harrah’s Entertainment (NYSE:HET). The guru of gambling owns, operates, and/or manages more than 40 casinos in four countries, according to Hoover’s. HET isn’t tied to the neon wasteland that is known as Vegas, it also operates casino hotels, dockside and riverboat casinos, and Indian gaming establishments. Recently, HET fortified its place at the top of the gaming world, by acquiring rival Caesars Entertainment (CZR) for $9.4 billion in cash, stock, and debt. On Friday, optimists placed their bets on the swami of the slots, piling into HET’s August 75 call (HET HO) to the tune of 5,080 contracts. Optimistic call bets now outnumber pessimistic put bets nearly three-to-one in the front three months of options. As a result, HET now sees its SOIR check in at 0.33, the lowest reading taken during the past 52 weeks.
Further bets are being placed on HET in the analyst community. According to Zacks, 18 of the 22 analysts covering the entertainment giant rate it a “hold” or better. This is good news right now for HET, as this fickle gathering could quickly change its mind and stack the odds for a rally against the casino king.
The only place where bets are truly being placed against HET is in the short-interest world. Checking in on the latest short-interest numbers, I see that pessimistic positions increased by a sizeable 24.97 percent. This will only add to the 9.80 percent of the company’s float that was available as of May 10 (according to Yahoo!Finance). This is more than enough for HET to see a bit of a rally as those who have shorted the shares scramble to cover their positions.
I wouldn’t be stepping out on a limb if I said that HET’s monthly chart shows stellar performance from the blackjack behemoth. HET has steadily increased along the support of its 10-month moving average for the better part of the past four-plus years. On those occasions where this support has crapped out, HET’s 20-month moving average has itself provided a level of support that has only been breached eight times since January, 2000. Currently, HET is battling resistance at a new all-time high. Can the commander of craps break through? It may be difficult, but isn’t impossible; as indicated by the company’s Schaeffer’s Equity Scorecard ranking of 5.0 out of a possible 10.
Click the following link to see a Monthly Chart of HET with 10-Month and 20-Month Moving Averages since January 2000: http://www.schaeffersresearch.com/wire?ID=13498 .
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About Schaeffer’s Investment Research (www.SchaeffersResearch.com)
Schaeffer’s Investment Research, founded by Bernie Schaeffer in 1981, is financial information and trading resources company. It publishes Bernie Schaeffer’s Option Advisor, the nation’s leading options subscription newsletter. The firm’s contrarian approach focuses on stocks with technical and fundamental trends that run counter to investor expectations. The firm’s website, http://www.SchaeffersResearch.com , is recognized as one of the leading information sources for stock and options traders and was cited as the top options website by both Forbes and Barron’s. Click here for more details about Schaeffer’s trading methodology: http://www.SchaeffersResearch.com/method .
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