Best know for its AutoCAD line of software, Autodesk (NASDAQ: ADSK, Stock Forum) specializes in software for computer-aided design. The company's flagship product is used by architects and engineers to design, draft, and model products and buildings. The software firm's other offerings include geographic information systems (GIS) packages, precision drawing software, and multimedia tools for digital content creation.
While the technology sector has come under fire recently due to cutbacks in corporate IT spending, ADSK is a laggard even within this underperforming sector. Specifically, the Semiconductor HOLDRS Trust (SMH) has fallen more than 36% since January, while ADSK has plunged more than 61% during this time frame. What's more, the equity has underperformed the S&P 500 Index (SPX) by more than 63% during the prior 60 trading days.
From a short-term perspective, ADSK has been pressured lower by overhead resistance at its falling 10-day and 20-day moving averages since mid-August. The stock has recently breached round-number support at the 20 level, and its 10-day trendline has taken up residence in the area. The combination of resistance at the 20 level and short-term resistance from the stock's 10-day moving average poses quite a technical hurdle for the shares.
Pulling back for a broader view of the security, ADSK is trading in a range not seen since August 2004. The stock appears to have found some support at its 160-month moving average, which currently located in the 18 area. However, given the stock's poor performance, this technical support could be tenuous at best. A breach of the 160-month moving average could indicate that ADSK has further to fall before selling pressure is exhausted.
On the sentiment front, options players remain heavily bullish toward the equity, despite its poor price action. Specifically, ADSK's Schaeffer's put/call open interest ratio (SOIR) of 0.93 indicates that calls outnumber puts among near-term options. Furthermore, this reading falls below 64% of all those taken during the past year, meaning that options speculators have been more bullish only 36% of the time in the prior 52 weeks.
Digging into ADSK's open interest configuration, peak call open interest resides at the deep out-of-the-money November 25 strike, totaling more than 5,100 contracts. Meanwhile, peak put open interest for the November series rests at the in-the-money 22.50 strike, numbering about 4,200 contracts. This attention for overhead call and put open interest indicates that options traders do not expect ADSK to fall much further.
Another concern for the security lies with Wall Street analysts. According to Zacks, six of the 12 analysts following ADSK still rate the shares a "buy" or better. Additionally, Thomson Financial reports that the average 12-month price target for the equity is $28.25 per share - a 47% premium to the stock's close of $19.09 on Monday. Any downgrades or price-target cuts from this lingering bullish contingent could provide additional fuel for ADSK's long-term decline.
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