This Trendline Says 'Buy' T-Mobile Stock

Low expectations surround high performing T-Mobile shares

Jun 9, 2017 at 12:20 PM
facebook X logo linkedin

Shares of T-Mobile US Inc (NASDAQ:TMUS) have carving out a stream of higher highs over the last 12 months -- up more than 52%. TMUS stock's uptrend has been underscored by its rising 80-day moving average. If past is precedent, a recent pullback to this historically bullish trendline could suggest T-Mobile stock could take aim at its May 2 record high of $68.88.

According to data from Schaeffer's Senior Quantitative Analyst Rocky White, TMUS stock has averaged a 21-day gain of 5.7% over the last eight times it's come within one standard deviation of its 80-day moving average, and has been positive 86% of the time. A move of this magnitude would send TMUS stock near $69, based on its current perch at $65.21.

tmus stock daily chart june 9

TMUS Options Activity Shows Signs of Skepticism

T-Mobile shares could also see tailwinds, should skeptics start capitulating to its upward momentum. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day put/call volume ratio of 0.76 ranks in the 72nd annual percentile, meaning puts have been bought to open over calls at a faster-than-usual clip.

Drilling down, the June 62.50 put is home to T-Mobile's top open interest position, with nearly 26,500 contracts in residence. This could help contain any near-term pullbacks in TMUS stock -- perhaps in the wake of Tuesday's annual shareholders meeting -- as the hedges related to these bets unwind ahead of next Friday's options expiration.

TMUS Stock Ripe for a Short Squeeze

There's plenty of room for short sellers to throw in the towel on their losing positions. Short interest on TMUS rose 4.1% in the most recent reporting period, and now accounts for a healthy 7.9% of the stock's available float. At the equity's average pace of trading, it would take more than a week to cover these bearish bets -- meaning there's ample cash available to add fuel to T-Mobile's fire.

And while the majority of brokerages maintain a "buy" or better rating on TMUS stock, upbeat analysts are still weighing in on the shares. Just yesterday, Drexel Hamilton initiated coverage on T-Mobile with a "buy" rating and $80 price target, saying the company is "shaking up" the industry.

TMUS Options are Affordable Right Now

Now's an affordable time to bet on TMUS stock's short-term trajectory with options, considering its Schaeffer's Volatility Index (SVI) of 26% ranks in the 17th annual percentile. In other words, low volatility expectations are being priced into short-term T-Mobile options, a potential boon to premium buyers.

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI