The shares of Abercrombie & Fitch Co. (NYSE:ANF) gapped dramatically higher on Nov. 29 in reaction to the retailer's blowout earnings report. The positive momentum quickly cooled as the stock ran into its 80-day moving average. ANF is trading near this trendline once again, suggesting the retail shares could be headed on their next leg lower.
According to data from Schaeffer's Senior Quantitative Analyst Rocky White, there have been three other times since 2015 that ANF has come within one standard deviation of its 80-day moving average after spending a significant stretch below it (defined as closing below the trendline 60% of the time in the past two months, and in eight of the last 10 trading days). The stock has gone on to average a one-month loss of 18.6%, with not one of those returns positive.
Another move of this magnitude would put Abercrombie & Fitch stock below $15 for the first time since November 2017, based on its current perch at $18.33 -- down 1.5% on the day. Longer term, the shares have surrendered 38% since their mid-August peak at $29.69, and gapped below their 80-day and 200-day trendlines during a late-August earnings-induced sell-off.
Against this backdrop, there's already an ample amount of skepticism priced into ANF stock. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 3.54 ranks in the 92nd annual percentile, meaning puts have been bought to open over calls at a quicker-than-usual clip. Plus, 12 of 13 analysts maintain a "hold" or worse recommendation.
The stock is heavily shorted, too, with the 16.89 millions shares currently sold short representing one-quarter of ANF's available float. However, bears increased their positions modestly in the most recent reporting period, and continued accumulation could create bigger headwinds for the equity.