URBN has been a long-term outperformer on the charts
Shares of retail concern Urban Outfitters, Inc. (NASDAQ:URBN) are slightly lower this afternoon, down 0.7% at $45.49, after receiving a downgrade to "sector weight" from "overweight" at KeyBanc. From a broader perspective, however, URBN has been a long-term outperformer on the charts, not unlike its sector peer Tailored Brands (TLRD). The stock recently touched a fresh record high of $48.24 on June 13, and have picked up a whopping 156% over the past 12 months.
And despite Urban Outfitters stock's slight pullback to within one standard deviation of its 40-day moving average, Schaeffer's Senior Quantitative Analyst Rocky White says this retreat could be a buying opportunity. This is evidenced by the nine other times over the last three years where URBN has pulled back to this trendline after trading above it for a significant length of time. Following those nine prior signals, the stock went on to average a gain of 8.59% over the next month.
In the options pits, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows URBN's 10-day put/call volume ratio of 7.44 in the 82nd percentile of its annual range. This suggests that over the past two weeks, puts have been bought to open over calls at a faster-than-usual clip -- leaving plenty of room for call buyers to once again enter the ring.
Continued short-covering activity could help support another 40-day bounce for Urban stock. Short interest rose 23% during the past two reporting periods, and now represents more than 14% of the total available float. At URBN's average daily trading volume, it would take less than a week for shorts to cover their bearish bets.
Lastly, options are attractively priced for the security. This is according to its Schaeffer's Volatility Index (SVI) of 36%, which ranks in the low 6th annual percentile. This reading suggests short-term calls and puts have priced in lower volatility premiums only 6% of the time during the past year.