Keysight Stock Nears Historically Bullish Trendline

KEYS has been higher 100% of the time a month after tests of the 200-day

Managing Editor
Nov 14, 2018 at 2:17 PM
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Keysight Technologies Inc (NYSE:KEYS) is scheduled to report earnings after the close on Tuesday, Nov. 20. Below, we will take a look at how KEYS has been fairing on the charts, and see why now may be a good time to bet on the tech name's next leg higher, if history is any indicator.   

KEYS is up 0.1% at $57.85 in afternoon trading. The stock has been stair-stepping higher since early 2016, but since peaking north of $70 in August, has pulled back with the broader equities market. While the shares are staring up at the formerly supportive 120-day moving average, their recent pullback to the 200-day trendline could have bullish implications.

Daily Chart of KEYS with 120 and 200MA

According to Schaeffer's Senior Quantitative Analyst Rocky White, KEYS is now within one standard deviation of the 200-day trendline, after a lengthy stretch above it. There have been five similar signals of this kind in the past three years, after which Keysight stock went on to average a one-month gain of 11.4%, with a 100% positive return rate. Another surge of this magnitude would put the shares back above $64 by this time next month.

Digging deeper, options traders have been extremely bullish toward the tech stock, with data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) showing a 10-day call/put volume ratio of 41.98, ranking in the 84th annual percentile. This indicates that during the past two weeks of trading, calls have been purchased over puts at a wildly faster-than-usual clip.

Echoing this, the security's Schaeffer's put/call open interest ratio (SOIR) comes in at 0.09, which ranks in the low 2nd annual percentile. In other words, options traders seem relatively upbeat ahead of earnings, with data showing a higher-than-normal preference for near-term calls over puts.

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