SunPower Stock Shines a 'Buy' Signal

A short squeeze could push SPWR even higher

Managing Editor
Jan 11, 2018 at 12:23 PM
facebook twitter linkedin

SunPower Corporation (NASDAQ:SPWR) is up 9.6% to trade at $9.31, on track to finish about the $9 level for the first time since Dec. 22. Earlier in the week, however, the solar stock pulled back to within one standard deviation of its 40-day moving average. This SPWR pullback may have marked a buying opportunity, as the trendline has historically had bullish implications.

According to Schaeffer's Senior Quantitative Analyst Rocky White, following the last four pullbacks to the 40-day moving average in the past three years, the energy name was up an average 11.95% one month later. If past is precedent, a move of similar magnitude could put SunPower stock back atop the $10 level for the first time since its late-July bear gap.

Pullbacks SPWR

Analyst sentiment still leans bearish. Exactly 60% of brokerages covering the solar stock rate the shares a "hold" or "strong sell." In addition, the average 12-month price target sits at $9.29 -- below current levels. Continued technical outperformance could prompt analysts to re-think their bearish positions.

A short squeeze could also provide more fuel for SunPower's rally. Short interest increased by 8.2% during the last reporting period to 13.30 million shares. This represents a whopping 23% of SPWR's total available float.

In the options pits, calls have been favored over puts among short-term traders. This is according to Schaeffer's put/call open interest ratio (SOIR) of 0.45, in the 10th annual percentile. Along those lines, SPWR options are cheap right now. The stock's Schaeffer's Volatility Index (SVI) of 52% ranks in the 15th annual percentile, meaning low volatility expectations are currently being priced into short-term contracts.


If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!



Special Offers from Schaeffer's Trading Partners