Apparel and sporting goods name Academy Sports and Outdoors (ASO) is in the midst of a pullback, following a long-term climb up the charts. The shares bounced off an annual low of $25.10 in May 2022, but by mid-April touched a record high of $69.02. The shares’ recent drop is looking like an ideal entry point for contrarians, especially as ASO nears a historically bullish trendline.
Specifically, over the past three years, there were six other occasions where Academy Sports and Outdoors stock was within one standard deviation of its 100-day moving average after spending a significant period above it, according to Schaeffer’s Senior Quantitative Analyst Rocky White. One month after testing this trendline, the security was higher 83% of the time, and sported an average one-month return of 14.1%. From its current perch of $60.26, a move of similar magnitude would put the stock at $68.75 — within a chip-shot of a fresh record high.
Shorts are looking firmly in control, with the 7.96 million shares sold short now making up 14.7% of the security’s available float. Should some of these shorts start hitting the exits, it could catapult the equity higher.
Now looks like an affordable time to bet on the security’s next move with options. ASO’s Schaeffer’s Volatility Index (SVI) of 39% sits in the 8th percentile of readings from the past 12 months, suggesting options are currently affordably priced.
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