The shares of DowDuPont Inc (NYSE:DWDP) were trading near $72 in late August, before falling all the way down to the $51.32 by Oct. 26. A rebound from here quickly stalled out near DWDP's 40-day moving average, and the shares found their way to a record low of $48.89 on Dec. 26. The equity has since rallied back up to this key trendline, and history suggests the Dow stock is poised for its next leg lower.
There have been four other times since DWDP began trading in September 2017 that the stock has come within one standard deviation of this moving average after a lengthy stretch below it. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, the equity averaged a one-month loss of 4.72% following these previous signals. Another move of this magnitude would put DowDuPont shares back near $52.32, based on its current perch at $54.91.
Options traders have certainly been anticipating more downside for DWDP. 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 3.01 ranks in the 98th annual percentile, meaning puts have been bought to open over calls at a quicker-than-usual clip.
The bulk of this activity occurred back on Dec. 21, when one trader sold to close their December 55 puts and rolled them down and out to the February 45 puts. In other words, the put buyer expects DowDuPont stock to sink below $45 by February options expiration.
Analysts, on the other hand, are mostly bullish toward DWDP. Eight of the 14 brokerages in coverage maintain a "strong buy" rating, with not a single "sell" on the books. Plus, the average 12-month price target of $74.42 is a 35.4% premium to current trading levels. This puts the Dow stock at risk of bearish brokerage notes, should it retreat once more from its 40-day trendline.