Genworth (GNW) Bull Train Leaving the Station

10/14/2009 12:01 am EST

Focus: STOCKS

Elizabeth Harrow

Financial Analyst, Schaeffer's Investment Research, Inc.

Sentiment is beginning to retreat from peak bearish levels on Genworth Financial, Inc. (GNW). During the past five days, traders on the International Securities Exchange (ISE) have bought to open 4,316 calls on GNW, compared to just 309 puts. This marks a dramatic change of pace, since the stock has racked up a ten-day put/call ratio of 0.77-just four percentage points from an annual pessimistic high.

GNW price chartIn the same vein, GNW's Schaeffer's put/call open interest ratio (SOIR) has cooled off from its bearish climax of 1.25, which was tagged as recently as October 2. Today, the SOIR arrived at a tamer 0.99, with calls narrowly outpacing puts among options set to expire within three months. However, this ratio still ranks higher than 94% of other such readings taken during the past year, indicating that there's still plenty of room for sentiment to improve.

From a technical perspective, GNW certainly seems worthy of more optimistic attention. The shares have added 319% year-to-date, and they've outperformed the broader S&P 500 Index (SPX) by nearly 67 percentage points during the past 60 trading days.

In fact, the stock's current pullback could provoke more bulls to buy into GNW's uptrend. The equity has retreated from its recent peak near $14, and is now preparing to meet back up with solid technical support from its ten- and 20-week moving averages.

By Elizabeth Harrow of Schaeffer's Trading Floor Blog

Find more analysis and market commentary at Schaeffer's Trading Floor Blog

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