Buy This Bank Stock Before Earnings

HBAN stock tends to muscle higher after pullbacks to its 160-day moving average

Apr 12, 2018 at 2:23 PM
facebook twitter linkedin


Bank stocks are mostly higher today, after BlackRock (BLK) kicked off earnings season for the finance community with a win. Huntington Bancshares Incorporated (NASDAQ:HBAN) stock is no exception, muscling higher in afternoon trading. What's more, HBAN shares just flashed a historical "buy" signal on the charts, suggesting now could be an opportune time to jump in on the equity ahead of the company's own earnings report later this month.

After touching a post-financial-crisis high of $16.60 in mid-March, Huntington stock slipped with the broader equities market. The shares pulled back to support in the $14.40 area, which represents a 50% Fibonacci retracement of their rally from their August lows to the aforementioned high. Further, HBAN dipped to within one standard deviation of its 160-day moving average, after a lengthy stretch above this trendline -- a chart pattern that's preceded healthy gains for HBAN in the past.

According to data from Schaeffer's Senior Quantitative Analyst Rocky White, after the last four pullbacks to this moving average, HBAN was higher one month later 100% of the time, averaging a gain of 6.78%. At last check, the security was up 2.2% at $14.97. A similar pop over the next month would put the banking stock back around $15.96.

hban stock chart

That month will also include Huntington Bancshares' next earnings report, slated for release on Tuesday, April 24. A stronger-than-expected earnings showing could shake loose some of the new HBAN short sellers, as short interest surged 22.4% during the past two reporting periods.

And while HBAN options volume tends to run light on an absolute basis, an unwinding of pessimism in the options pits could still drive the shares higher. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 1.01 is in the 90th percentile of its annual range, suggesting recent buyers have picked up HBAN puts over calls at a faster-than-usual clip during the past two weeks.


A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earnings guide for Q3 before it's too late!


  
 
Special Offers from Schaeffer's Trading Partners