Ciena Stock Flashing Reliable "Buy" Signal Again

The tech stock is near a historically bullish trendline

by Patrick Martin

Published on Sep 6, 2019 at 11:36 AM

When we last checked in with Ciena Corporation (NYSE:CIEN), the stock was flashing a bullish signal ahead of earnings. Today, three price-target cuts -- the lowest coming from UBS to $43 from $46 -- have CIEN down 2% to trade at $39.11. The good news is that this puts the networking technology concern back near the same bullish alarm that sounded in late May. 

According to data from Schaeffer's Senior Quantitative Analyst Rocky White, CIEN is back within one standard deviation of its 200-day moving average. This signal has shown up six times before in recent years, with the stock ending higher one month later 80% of the time. Plus, CIEN has averaged a 12.2% positive return after these signals. From its current perch, a similar move would put the stock back atop the $43 region for the first time since mid-August.

The last time Ciena stock encountered this trendline, it gapped higher post-earnings and kept climbing to a 12-year high of $46.78 on July 29. While the shares have shed 16% since that peak, they're still up 16% in 2019, and 26% year-over-year. 

Daily Stock Chart CIEN

Lastly, now looks like it may be a good time to target short-term contracts on CIEN. This is per its Schaeffer's Volatility Index (SVI) of 34%, which ranks in the 20th annual percentile, revealing that extremely low volatility expectations are being priced into near-term contracts at the moment.

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