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Shares of Century Aluminum (CENX) caught a lift Friday morning, as analysts at JPMorgan Chase adjusted their price targets on a number of metals and mining issues. Century's price target was hiked from $9 to $13, representing a premium of 13.2% to the stock's closing price on Thursday.
In the first hour of Friday's session, CENX soared to a gain of 7.8% as traders cheered the upbeat note. Technical support from the stock's 10-week and 20-week moving averages also helped to add some lift; these two trendlines are now on the verge of a bullish cross. A finish above $12 would be a major development for the equity, since this level has capped all of CENX's weekly closes since August.
Checking out the stock's sentiment backdrop, today's gains could be the result of a short-squeeze rally. Nearly 13% of CENX's float has been sold short, representing an ample supply of sideline cash. If these bears are sufficiently spooked by today's bullish note, it should help the shares extend their early gains.
Meanwhile, option volume on CENX Friday spiked to five times the usual levels. Most active is the stock's December 7.50 call, where 1,010 contracts have crossed the tape on open interest of 10,923 contracts. About 60% of this volume has changed hands at the bid price, revealing a bias toward selling activity, and implied volatility on the option is down 40.5% at last check. Based on this data, it looks like bullish speculators are taking profits today on their winning CENX positions.
Elizabeth Harrow is a senior equities analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.
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