Retail giant Kroger (KR) is making its way back up the charts, after multiple bear gaps knocked the security off its Jan. 27 all-time high of $42.99. What’s more, KR is already up 19.3% year-to-date, and logged its fourth-consecutive monthly win in June. The even better news is that KR’s latest pullback has placed shares near a trendline with historically bullish implications, which could push the security closer to its record peak.
Digging deeper, Kroger stock just came within one standard deviation of its 80-day moving average, after spending weeks above this trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, nine similar signals have occurred in the past three years. The equity enjoyed a positive return one month later in 88% of those cases, averaging a 4.4% gain. From its current perch, a comparable move would put KR just shy of the $40 mark.
The brokerage bunch leans bearish towards Kroger stock. Of the 16 analysts in question, 14 carry a “hold” or worse rating. Should some of this sentiment shift, it could mean more upside for KR. There is similar sentiment among short sellers, leaving KR ripe for a short squeeze. The 57.15 million shares sold short make up 7.7% of the stock’s available float, or over a week’s worth of pent-up buying power.
A unwinding of pessimism over in the options pits could fuel additional tailwinds for Kroger stock. This is per the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.11, which sits higher than 78% of readings from the past year, indicating short-term options traders have rarely been more put-biased.
Now is the time to snag KR premiums, which are affordable at the moment. The security's Schaeffer's Volatility Index (SVI) of 22% stands higher than only 7% of readings in is annual range. In other words, options players are currently pricing in low volatility expectations.
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July 08, 2021 at 12:45AM
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Kroger Stock Ready to Retake Record Peak - Forbes
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