Schaeffer's Top Stock Picks for '25

2 Stocks Obliterated After Profit Warnings

Community Health Systems and Spirit Airlines stocks are deep in the red

Managing Editor
Jul 27, 2017 at 3:24 PM
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After touching record highs earlier, the major stock indexes have swung lower, led by a steep sell-off in tech stocks. Hospital stock Community Health Systems (NYSE:CYH), mining stock Cliffs Natural Resources Inc (NYSE:CLF), and airline Spirit Airlines Incorporated (NASDAQ:SAVE) are all trading in negative territory, and are all currently short-sale restricted. Here's a quick look at what's moving shares of CYH, CLF, and SAVE.

CYH Stock Derailed After Earnings Warning

Community Health Systems stock is down 15% to trade at $7.19, after the company warned of a surprise loss for the second quarter. The hospital operator is set to report earnings after the close on Tuesday.

The shares are now set to fill a post-earnings bull gap from February, and will end below their 200-day moving average for the first time since April. As a result, Mizuho slashed its price target on CYH stock to $7.50 from $10. Most analysts were already skeptical, however. Of the 17 brokerages covering CYH stock, 15 rate it a "hold" or worse.

Subpar Earnings Chipping Away At CLF Stock

Cliffs Natural Resources stock is down 8% to trade at $7.09, as traders jeer the company's second-quarter earnings report. Prior to today's drop, CLF shares were struggling to topple their 200-day moving average, and the stock is now testing its 30-day trendline, which helped lead CLF lower in the first half of 2017.

Diving into the options pits, a handful of short-term options traders are likely kicking rocks today. Cliffs Natural Resources sports a Schaeffer's put/call open interest ratio (SOIR) of 0.36 -- higher than just 16% of all other readings from the past year. In other words, near-term options traders are more call-heavy than usual right now.

Spirit Airlines Stock Grounded After Earnings, Guidance

Spirit Airlines stock is down 20% to trade at $39.13 -- on pace for its steepest one-day percentage loss ever -- after the airline company reported disappointing quarterly earnings and warned of the impact of deep discounts from competitors. It's been a tough few months for SAVE stock, which has shed 30% in the past three months, and is pacing for its lowest close since September.

Prior to today, Spirit Airlines options traders were picking up bearish bets at an accelerated clip. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), SAVE has a 10-day put/call volume ratio of 4.66, which ranks 2 percentage points from an annual high. 

 
 

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