Paypal Holdings Inc, Navient Corp Shares Signaling a Bounce

History suggests financial stocks PYPL and NAVI could spring off of long-term trendlines

Feb 3, 2017 at 11:54 AM
facebook twitter linkedin


Financial stocks are in the crosshairs today, amid rumblings that President Donald Trump could roll back regulations within the industry -- including Dodd-Frank. Shares of Paypal Holdings Inc (NASDAQ:PYPL) and Navient Corp (NASDAQ:NAVI) are benefiting, too, both solidly higher at last check. Plus, based on a closer look at the stocks' respective charts, the duo could be on the verge of a near-term breakout.

Currently, PYPL is up 0.7% at $39.86. What's more, the financial shares are flirting with their 200-day moving average, which has served as a bullish signal in the past. In the last three years, the stock has touched this trendline four times, and gained ground in the ensuing month 100% of the time. On average, PYPL's post-signal 21-day return is a gaudy 4.8%.

paypal stock chart with 200 day moving average

It's a similar story for NAVI. The shares recently touched their 160-day moving average, and following the two prior occurrences, they soared an average of almost 21% in the ensuing 21 sessions. It looks like the bounce is already beginning, as the stock is currently up 1.9% at $15.39.

Two other factors could bolster both PYPL and NAVI shares. For one, each stock's 14-day Relative Strength Index (RSI) settled at 34 last night -- just a chip-shot from "oversold" territory, suggesting today's gains may have been in the cards. For another, PYPL and NAVI have elevated short-interest ratios (SIR) of 6.20 and 6.60, respectively. In other words, there's plenty of pent-up buying power on the financial stocks, which could lead to a powerful short-squeeze rally.

Technically speaking, Paypal Holdings Inc (NASDAQ:PYPL) and Navient Corp (NASDAQ:NAVI) have cooled off lately, as evidenced by their low RSI readings and trendline pullbacks. Longer term, NAVI has been the stronger of the two, soaring 61.3% year-over-year, while PYPL has tacked on a more modest 7.2%.

Don't miss Schaeffer's free weekly stock market forecast. Sign up now for Monday Morning Outlook.
 

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 

 


 


 
Special Offers from Schaeffer's Trading Partners