Since March 2009, Veeco Instruments Inc.’s (NASDAQ: VECO, Stock Forum) steep ascent has been underlined by its 10-week and 20-week moving averages. These intermediate-term trendlines have contained all of VECO's weekly closes in the intervening months, indicating that this double-barreled support is rock solid. But, with the stock's Relative Strength Index (RSI) of 68 climbing near “overbought” territory, it seems that some speculators are betting on a reversal of VECO's recent rally.
More specifically, VECO's 10-day put/call volume ratio on the International Securities Exchange (ISE) is pointing to elevated levels of skepticism, arriving today at 2.25. Not only does this ratio reveal that puts bought to open have more than doubled calls during the past two weeks, it also ranks higher than roughly 67% of other such readings taken during the previous year. In other words, traders on this exchange have purchased puts over calls at a faster clip only one-third of the time.
Not surprisingly, the equity's Schaeffer's put/call open interest ratio (SOIR) has ticked higher as speculators increasingly gravitate toward bearish bets. VECO's SOIR currently stands at 1.08, with puts outnumbering calls among options set to expire within three months. However, this ratio ranks in the 25th annual percentile, indicating that pessimistic sentiment is still far from peak levels.
Outside the options arena, short sellers are also betting on VECO to backpedal. Short interest surged by 20.8% during the past month, and now represents 21.6% of the equity's available float. At VECO's average daily trading volume, it would take 4.50 trading days for all of these pessimistic positions to be covered.
While the stock may be due for a bit of consolidation following its impressive run higher, the bullish prospects still look solid for VECO. The shares are resting easy atop multiple layers of technical support, and a general mood of skepticism and disbelief pervades the security's sentiment backdrop. As the stock capitalizes on chart support to continue its journey higher, a capitulation by the bears should supply fresh buying pressure.
Disclosure: Neither Elizabeth Harrow nor Andrea Kramer have any financial interest in any of the equities or products mentioned in this column.