Stocks: priceline.com, Sycamore Networks, Yum Brands, UAL Corp., and AMR Corp.
CINCINNATI--(BUSINESS WIRE)--December 05, 2006
Today's "Behind the Headlines" from Schaeffer's Investment
Research focuses on priceline.com (NASDAQ:PCLN), Sycamore Networks
(NASDAQ:SCMR), Yum Brands (NYSE:YUM), UAL Corp. (NASDAQ:UAUA), and AMR
Corp. (NYSE:AMR). "Behind the Headlines" is a report that analyzes
newsworthy stocks that are generating a lot of attention on Wall
Street. "Behind the Headlines" is published on
www.SchaeffersResearch.com - the home of Bernie Schaeffer and
Schaeffer's Investment Research.
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Behind the Headlines:
Airlines: Whether it's that we've entered the holiday travel
season, or that oil prices are a good distance away from the
$70-per-barrel mark, airlines are back in vogue. Since putting in a
near-term low in August at 44.43, the AMEX Airline Index (XAL) has
rallied along the support of its 20-day moving average, gaining more
than 33 percent. During the past couple of sessions, a number of
airlines have released their November traffic data. UAL Corp.'s
(NASDAQ: UAUA) United Airlines said its November traffic rose 2.4
percent, while AMR Corp.'s (NYSE:AMR) American Airlines said its
November traffic fell 1.1 percent. On the other hand, AMR's American
Eagle Airlines said November traffic rose 4.6 percent. Continental
Airlines (CAL) reported that November traffic rose 9.8 percent.
Technically speaking, UAUA, AMR, and CAL are all consolidating
into support at their ascending 20-day moving averages. A bounce off
these short-term trendlines could launch the securities on the next
leg of their uptrends. Furthermore, from a sentiment perspective, all
three companies saw an increase in their respective short-interest
readings during November. This growing pessimism has bullish
implications from a contrarian perspective, as it indicates that there
is potential sideline money available to fuel additional gains in the
Click the following link to see a Daily chart of UAUA, AMR, and
CAL since July 2006 with 20-Day Moving Average:
priceline.com: Last night, priceline.com (NASDAQ:PCLN) said
Hutchison Whampoa Ltd. and Cheung Kong (Holdings) Ltd. sold about 3.8
million shares of PCLN's common stock in an at-the-market offering
underwritten by Goldman Sachs Group (GS). The sale of the shares is
expected to close Thursday.
Technically speaking, the equity has been slowly grinding lower
and appears to be consolidating its recent gains along support in the
40 region. The security has a history of pullback and consolidations
along support since the stock bounced off its low of 18.20 in October
2005. These consolidation periods have preceded a sharp rally in the
Click the following link to see a Weekly chart of PCLN since
August 2005: http://www.schaeffersresearch.com/wire?ID=17825
Meanwhile, short sellers are attempting to call a top to the
stock's ascent. In November, the number of PCLN shares sold short
increased by one percent to an eight-month high of 5.1 million shares.
With a short-interest ratio of 5.3 days to cover, the stock could
benefit from a short-covering rally should the equity pop higher.
Sycamore Networks: Before the open this morning, Sycamore Networks
(NASDAQ:SCMR) announced that its fiscal first-quarter revenue rose 28
percent to $34.9 million. The firm stated that it was delaying the
filing of its Form 10-K for the fiscal year ended July 31, due to an
ongoing independent investigation into the granting of stock options
and related accounting.
The shares gapped higher on the positive revenue report, breaking
out of their previous trading range that had kept SCMR capped at the
3.80 level. However, today's pop higher has been stopped by former
resistance at the 4.10 level. This region halted the stock's rally
attempts in mid-October and late June. What's more, this region is
also home to the equity's declining 40-week moving average.
Click the following link to see a Daily chart of SCMR since June
Yum Brands: Yum Brands (NYSE:YUM) has been hit with a barrage of
news recently. The company was relieved when a New Jersey health
official said that the threat of more E. coli infections linked to
Taco Bell restaurants appears to have passed. At least three dozen
people were stricken in New Jersey and New York and apparently all the
victims had eaten at Taco Bell restaurants. Meanwhile, the firm
reported that its board has approved a 100-percent increase in its
quarterly cash dividend to 30 cents a share from 15 cents. The
dividend will be paid on March 30 to shareholders of record on March
9. Looking ahead, the firm expects to return more than $1 billion to
shareholders in 2007 with share buybacks, reducing its share count by
at least three percent.
From a technical perspective, the stock is consolidating along the
support of the 61 level and is attempting to bounce off support at its
20-day moving average. What's more, the equity's 10-week trendline is
climbing into the region, which could help to boost the shares higher.
The equity has been in an uptrend since tagging a near-term low in
August of $44.21.
Click the following link to see a Daily chart of YUM since July
2006 with 20-Day Moving Average:
Meanwhile, Wall Street has yet to completely buy into the stock's
rally. According to Zacks, seven of the 13 analysts following YUM rate
it a "hold," leaving ample room for potential upgrades.
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About Schaeffer's Investment Research (www.SchaeffersResearch.com)
Schaeffer's Investment Research, founded by Bernie Schaeffer in
1981, is a 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:
Joseph Hargett, 513-589-3800
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