Buy Signal Just Sounded For CIEN Stock Ahead of Earnings

The tech concern is slated to report its second-quarter earnings before the open next Thursday

Deputy Editor
May 31, 2019 at 12:32 PM
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The networking technology concern Ciena Corporation (NYSE:CIEN) has been trading lower on the charts since hitting its two-month peak of $40.76 in late April. Since stringing together seven consecutive losses, before bottoming out at a four-month low of $33.58 on May 15, CIEN has been consolidating between the $34 and $35.50 regions, trading at $34.86 at last glance. However, with Ciena's earnings right around the corner on Thursday, June 6, and a new bull signal flying up, there may be a chance for the security to break north of this recent pressure. 

During CIEN's recent pullback, the stock came within one standard deviation of its 200-day moving average after a lengthy period above it. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, this signal has shown up five times before in recent years, with the stock ending higher one month later 75% of the time. Plus, CIEN has averaged a 9.1% positive return after these signals. From its current perch, a similar move would put the stock back atop the $38 region for the first time in nearly a month. 

CIEN May 31

Looking at CIEN's past earnings, the equity has enjoyed a higher return one day later 50% of the time. This time around, the options market is pricing in a slightly bigger swing than usual at 10.7%, compared to the 8.6% move the stock averaged after its last eight reports. 

Analyst sentiment surrounding Cienna is generally positive, with 13 of the 19 ratings being a "buy" or better, and the other six at a tepid "hold." Plus, the consensus 12-month target price of $44.42 sits right beneath the stock's high from early March.

Options traders, on the other hand, have taken a more bearish stance, with CIEN's 10-day put/call volume ratio of 0.79 sitting in the 81st percentile of its annual range on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This could mean even more tailwinds on the charts, should some of these pessimistic positions begin to unwind. 

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