Stick With GLUU Stock, Says Signal

GLUU's pullback could be a buying opportunity

Deputy Editor
Feb 27, 2019 at 12:39 PM
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Glu Mobile Inc. (NASDAQ:GLUU) stock hit an 11-year high of $10.40 on Feb. 4, just before the company reported disappointing earnings. The equity subsequently dropped on the news, but has found an area of support atop the $8.50 level, and still boasts in impressive year-over-year gain of 129%. What's more, the mobile game maker just flashed a bullish signal that, if past is precedent, could mean GLUU is on the cusp of its next rally. 

Specifically, GLUU just came within one standard deviation of its 80-day moving average, after an extended period above the trendline. According to data from Senior Quantitative Analyst Rocky White, this signal has flashed six times before. After these signals, the security averaged a 14.5% gain one month later, and was higher 83% of the time. From where it currently stands at $8.65, a move of similar magnitude would place the stock just below the $10 area. 

GLUU Chart Feb 27

In the wake of GLUU's long-term rally, short sellers have been hitting the exits, with short interest down 37.2% in the past reporting period. An extended short squeeze could help propel the shares even higher.

That being said, now might be an attractive time to bet on Glu Mobile's next leg up with options. The equity's Schaeffer's Volatility Index (SVI) of 51% stands higher than only 25% of all other reading from the past year, meaning near-term options are relatively cheap at the moment. 

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