Texas-based oil-and-gas concern Patterson-UTI Energy, Inc. (NASDAQ:PTEN) has been motoring up the charts in impressive fashion. Up more than 25% in 2014, the shares hit a new high of $34.11 just last week, reaching their highest level since July 2008.
This week, the shares have consolidated some of their recent gains to trade at $31.68, potentially providing a good entry point for bulls waiting on the sidelines. On the charts, the stock is testing the area around its ascending 40-day moving average, which has provided support on a number of occasions during the past several months. Specifically -- according to our Senior Quantitative Analyst Rocky White -- there have been six prior signals of this variety. PTEN has gained an average of 6.7% in the 21 days after a move to the 40-day trendline, and has been positive 83% of the time three weeks later.
Encouraging from our contrarian perspective is the lingering skepticism toward PTEN shares, starting with Wall Street. Seven of the 15 analysts following the stock award it a tepid "hold" rating, while two regard it as a "strong sell." The tide may be shifting, however, as no fewer than six brokerage firms have lifted their price targets on the stock during the past three weeks. Further price-target hikes or upgrades could attract more positive attention to the shares.
Options players have also expressed a wary outlook toward Patterson-UTI. During the last 10 trading days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), nearly three put options have been purchased to open for every call. The resulting put/call volume ratio of 2.92 is higher than four-fifths of all comparable readings taken during the last 12 months. Should bearish speculators begin to capitulate, PTEN could see additional upside.
Finally, Patterson-UTI Energy, Inc. (NASDAQ:PTEN) options premium is relatively inexpensive right now, from a volatility perspective. PTEN's Schaeffer's Volatility Index (SVI) of 29% registers in the bottom 20% of the past year's worth of readings. Options players considering a bullish play on PTEN might look at the in-the-money August 28 call, currently sporting an ask price of $4.40.
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