December 2, 2020

Long-Term Signal Says PETS Could Run Higher

By haziqbinarif

The shares of pet pharmacy company PetMed Express (PETS) are up 3.2% to trade at $31.72 at last check, struggling under pressure at the $32. Through this recent sideways price action, however, PETS has come within one standard deviation of its 160-week moving average – a historically bullish trendline that could be signaling more upside for the stock. Schaeffer’s Senior Quantitative Analyst Rocky White defines that as the equity trading above the moving average for 80% of the time over the past 20 weeks, closing north of the trendline in seven of the last ten sessions.

According to White’s data, the security has experienced 11 similar pullbacks within the past 15 years. Four weeks after these signals, PETS was higher 73% of the time, averaging a 6.14% pop. A similar move, at the stock’s current perch, would place it at $33.66.

Meanwhile, an unwinding of bearish bets could also push the stock higher. Though short interest has just begun to fall off, down 3.5% during the last reporting period, these 6.14 million shares sold short still account for 31.6% of the stock’s available float, or nearly eight days’ worth of pent-up buying power, at PetMed stock’s average pace of trading.

When weighing in on PETS, options looks like a good way to way to go. The equity’s Schaeffer’s Volatility Index (SVI) of 49% stands higher than just 16% of all other readings from the past year, implying that near-term option traders are pricing in relatively low volatility expectations at the moment.

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