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

Digital Content Manager
Apr 11, 2019 at 2:16 PM
facebook twitter linkedin


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. 
 

Now is the time to join our thriving community of Event Traders who consistently profit from every earnings season. With this discounted subscription opportunity, you'll stay ahead of the curve and seize opportunities others miss. Do not let Q3 earnings season pass you by – subscribe now and supercharge your portfolio with expert insights that turn market reactions into profit-generating opportunities!! Don't waste another second... join us right now before the next trade targeting +200% is released!