Buy Puts on This Finance Stock After Earnings

The 40-day trendline is once again emerging as resistance

Emma Duncan
Jul 26, 2019 at 12:49 PM
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Investment management name Invesco Ltd. (NYSE:IVZ) is moving lower this afternoon, last seen down 0.9%, at $19.34 -- set for back-to-back losses following yesterday's negative earnings reaction. IVZ has been stuck in between the the $19 and $21 levels since May, dragging its year-over-year loss to 25%. However, per data from Schaeffer's Senior Quantitative Analyst Rocky White, Invesco stock may be preparing for an even steeper fall on the charts.

Specifically, the security just moved back to within one standard deviation of its 40-day moving average, after a lengthy stretch below the trendline. This signal has flashed 10 times in the past three years, per White, resulting in an average 21-day loss of 4.6%, with 70% of the returns negative. A similar fall would put IVZ back below $18.50 for the first time since mid-February. 

Daily IVZ with 40MA

Analysts continue to take an extremely pessimistic stance toward Invesco stock. Currently, 11 of the 12 following brokerage firms sport a tepid "hold" or "strong sell" recommendation, with just one "strong buy" on the books. However, there's room for price-target cuts to come down the pike, with the security's average 12-month price target of $22.04 perched 13% above current trading levels.

Short interest on IVZ rose 20.6% during the two most recent reporting period, but still only accounts for just 6% of the stock's total available float. Continued short selling could ramp up pressure on the struggling financial stock.


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