Keurig Dr Pepper Stock Could Stage Another Bounce Soon

Since their record high of $41.31 on Aug. 18, the shares of Keurig Dr Pepper (KDP) have been cooling off. Dropping to the $37.50 level before staging a brief bounce back toward the 20-day moving average. While this trendline wound up rejecting the rally attempt, the security has found some padding at the aforementioned $37.50 mark once more. An additional layer of support could also be emerging, in the form of a historically bullish trendline that just flashed on the charts.

According to a study from Schaeffer’s Senior Quantitative Analyst Rocky White, KDP just came within one standard deviation of its 160-day moving average after a lengthy period travelling above here. The beverage stock has seen five similar signals over the past three years, enjoying a positive one-month return on 80% of these signals, and averaging a 4.4% pop during that time period. From its current perch right at the $37.50 mark, a similar move would put the equity at $39.15, clearing the recent hurdle at the 20-day moving average.

The security has remained a relative outperformer to the broader market, holding onto a small year-to-date lead, and a year-over-year gain of 5.7%. This could invite a round of analyst upgrades, especially considering five of the 10 in coverage call KDP a “hold.”

An unwinding of pessimism among options traders could also contribute to some tailwinds for the stock. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), KDP sports a 10-day put/call volume ratio of 2.28, which sits higher than all but 1% of readings from the past 12 months. In other words, puts have rarely been more popular among these traders during this time period.

On a final note, Keurig Dr Pepper stock’s 14-day Relative Strength Index (RSI) sits at 34, sitting just on the cusp of “oversold” territory. This could be indicative of a short-term bounce for the beverage name.

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