Pullbacks to KDP's 80- and 100-day moving average have bullish implications
Beverage stock Keurig Dr Pepper Inc (NYSE:KDP) nabbed a record high of $29.76 back on May 15. Since then, however, the shares have logged three straight weekly losses, sending KDP toward two key trendlines that have historically bullish implications. In other words, the security could be eyeing its next surge higher.
Specifically, the equity is trading within one standard deviation of its 80-day moving average, after a lengthy stretch above it. According to Schaeffer's Senior Quantitative Analyst Rocky White, there have been nine other times in the last three years KDP stock has tested support at this trendline, resulting in an average one-month gain of 5.2%, with 78% of those returns positive.
The stock is also similarly near its 100-day moving average. According to White, after the last seven times KDP pulled back to this trendline, it went on to average a one-month gain of 8.2%, and was higher 78% of the time. With the stock's current perch at $28.10, a similar move would put the shares above $30 -- in new record high territory.
A short squeeze could keep the wind at the security's back. Short interest has climbed to all-time high territory, and now accounts for 7.3% of KDP's total available float. At the stock's average pace of trading, it would take shorts over a week to buy back their bearish bets.