HARD TIMES FOR HARDWARE

Shares of HP have fallen more than 18% in 2009 and have lost more than 45% since retreating from their November 2007 peak of $53.48. Furthermore, the stock has come under resistance from its declining 20-week moving average, and HP has logged only one weekly close above that trend since the beginning of October. The security has also breached key support at the 33 to 34 region and is currently testing former support in the 29 region.



Digging into the stock's options backdrop, we find a definite preference for calls in the stock's March options series. Peak call open interest resides at the 37.50 strike, with more than 30,700 contracts in residence. The March 30 call also has heavy open interest, with nearly 16,000 contracts. On the other hand, peak put open interest sits at the March 30 strike, with fewer than 15,600 contracts. Options players are definitely looking for a rebound in the shares during the next few weeks.

Elsewhere, we find that Wall Street is quite smitten with this underperformer. The latest data from Zacks reveal that the stock has 13 "buy" ratings, seven "holds" and just one "sell" ranking. This bullish configuration leaves ample room for potential downgrades from this group.

Furthermore, the average 12-month price target for HP stands at $42.75, according to Thomson Reuters. This estimate implies that analysts are expecting the shares to rally more than 30% during the next 12 months. Should the company continue to disappoint the Street, the stock could come under selling pressure following any downgrades or price-target cuts. Options traders should consider the stock's May 32.5 put to take advantage of additional weakness in the shares.

When investors aren't concerned about the health of Steve Jobs, they've turned their attention to whether Apple (nasdaq: AAPL - news - people ) is going to see a drop in its bottom line as consumers pull back their spending on the company's flashy toys.

Admittedly, Apple has held up better than some of its peers; the security is currently sitting on a year-to-date gain of more than 5%. However, the equity's technical picture is far from rosy. The shares have been trapped in a sideways channel between resistance at the 105 region and support at the 80 level since early November. The stock was recently rejected by resistance at the upper rail of the channel, and is once again headed for another test of the 80 level.

From a longer-term perspective, the shares are in contention with resistance at their declining 10-week and 20-week moving averages. Apple has logged only two weekly closes above these trend lines since late August. A rejection at these moving averages could finally push the shares through support at the 80 level.

Wall Street remains enamored of the computer giant; the stock has earned 16 "buy" ratings, six "holds" and only one "strong sell." In addition, the average 12-month price target for Apple stands at $122.50, according to Thomson Reuters. This estimate implies that analysts are looking for a 35% rally in the shares during the next 12 months. Any downgrades or price-target cuts from this optimistic pack could spell trouble for the shares.

Looking at the stock's options backdrop, we find that options players are actually quite skeptical of the shares. Peak put open interest sits at the out-of-the-money 85 strike, with nearly 55,000 contracts. The March 80 put has open interest of more than 29,000 contracts, and the March 90 put has open interest of more than 23,000 contracts. This hefty accumulation of puts could serve as a layer of options-related support for the shares.

Meanwhile, on the call side, peak March open interest sits at the 95 strike, with only 27,000 contracts. This preference for puts over calls indicates short-term options players are relatively skeptical of the shares. Considering the stock's lackluster performance and the overall weakness of the tech sector, this pessimism is to be expected.

I am reluctant to recommend an option position on Apple, despite the fact that I believe the shares have further to fall. Traders should consider waiting until the security has suffered a significant break below the 80-level before initiating a bearish position on the stock, as the the 80-region could continue to hold during the near term.