Signal Says Don’t Sweat The PLUG Pullback
Renewable resource stock Plug Power (PLUG) has had an impressive run on the charts since bottoming out to $5.36, more than doubling in value since then. Today though, PLUG is down 5.7% to trade at $11.39, despite a new partnership with Linde for fuel cell vehicles. The good news is that the stock’s 11.7% monthly deficit has brought it in contact with a historically bullish trendline, if past is precedent.
According to data from Schaeffer’s Senior Quantitative Analyst Rocky White, Plug Power stock has come within one standard deviation of its 40-day moving average after a lengthy stretch above it, defined for this study as having traded above it 60% of the time in the past two months, and in eight of the last 10 sessions. This signal has occurred four times in the past three years. One month later, the equity was higher 67% of the time, averaging a gain of 45.4%. Another surge of this magnitude would send the stock to $16.37 – its highest level in over a year.
The equity is ripe for a short squeeze that could keep the wind at its back. Short interest increased by 4.2% in the two most recent reporting periods, and the 54.31 million shares sold short accounts for 23.5% of PLUG’s total available float.
There could be a similar unwind in the options pits. PLUG’s Schaeffer’s put/call open interest ratio (SOIR) which stands higher than 89% of readings from the past year. This implies short-term option traders have rarely been more put-biased.
Options are certainly looking attractive on Plug Power stock at the moment. This is per the security’s Schaeffer’s Volatility Index (SVI) of 96%, which ranks in the low 14th percentile of all other readings from the past 12 months. Simply put, options players are pricing in relatively low volatility expectations at the moment.