Bull Signal Might Mean Major Upside for This Retail Stock

ANF stock has consolidated its gains since a March bull gap, but could break out soon

by Lillian Currens

Published on Apr 11, 2019 at 2:16 PM

Retail concern Abercrombie & Fitch Co. (NYSE:ANF) has been relatively range-bound since its post-earnings bull gap in early March, trading between support in the $25 area and resistance around $27.50. However, ANF -- already up nearly 30% year-to-date -- could be ready to rocket higher, if history is any indicator. 

The stock is up 1% at $25.76, at last glance, and just came within one standard deviation of its 40-day moving average, following a lengthy stretch above that trendline. This signal has flashed six times before, per data from Schaeffer's Quantitative Analyst Rocky White. ANF was positive one month later 67% of the time, averaging a 10.8% gain. A similar move would put the equity above the $28.50 level -- an area it hasn't traversed since its mid-August highs. 

ANF Chart Apr 11

Despite ANF's recent behavior on the charts, analysts are still approaching the stock with caution. Currently, eight analysts give it a "hold" rating, and three give it a "sell" or worse. There's not a single "buy" to be seen, which means the door is wide open for upgrades, should this positive price action continue. What's more, the consensus 12-month price target of $24.50 is a 4.5% discount to current levels. 

Short sellers continue to circle Abercrombie, too. Short interest rose 15.6% in the last two reporting periods, and now accounts for a solid quarter of the stock's available float. At ANF's average pace of trading, it would take over a week to cover these pessimistic positions, which could put even more wind at the equity's back. 

Considering this, now might be the time to bet on Abercrombie & Fitch stock's next leg up with options. ANF's Schaeffer's Volatility Index (SVI) of 40% stands higher than only 3% of all other reading from the past year. This means that near-term options are pricing in low volatility expectations of late. 

a schaeffer's exclusive

5 HOT STOCK PICKS

Heat up your summer trading with this FREE insider report!


 
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


The Next Step Towards a Cashless Economy
Click to continue to advertiser's site.
Research Firm: "Buyer Beware" of This Biotech
S&W Seed stock hasn't seen a surge of this magnitude since 2017
Retail Earnings, Consumer Spending Data to Steer Post-Holiday Trade
Consumer spending data hits Wall Street on the final trading day of May
The Next Step Towards a Cashless Economy
Click to continue to advertiser's site.