Bull Signal Flashing for Abbott Stock Has Never Been Wrong

The 200-day has historically meant more upside for Abbott stock

Deputy Editor
Nov 6, 2019 at 12:18 PM
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The shares of Abbott Laboratories (NYSE:ABT) are inching higher following the pharmaceutical company's discovery of a new strain of Human Immunodeficiency Virus (HIV) called HIV-1 Group M, Subtype L. This discovery was published in the Journal of Acquired Immune Deficiency Syndromes (JAIDS), and highlighted how next-generation genome sequencing is helping scientists stay ahead of the virus.

The shares are up 0.8% at $82.97, at last check, testing their footing back atop their 60-day moving average. For the year, the stock has gained 14.7%, climbing higher last month after a bounce off the rising 200-day moving average before losing steam just below the $84 region. This pullback sent ABT back towards the aforementioned 200-day moving average, which, if history is any indicator, could mean an even bigger bounce for the security.

ABT Nov 6

According to data from Schaeffer's Senior Quantitative Analyst Rocky White, Abbot has seen three similar pullbacks to this trendline in the past few years. One month later, the stock was higher each time, averaging a 5.62% gain. A move of the same magnitude would put the stock just below the $88 region -- home to its all-time highs. 

Most analysts are already bullish on the equity, with 11 giving it a "buy" or better rating. Plus, ABT's 12-month consensus target price of $94.03 represents an untouched region for the security. However, two stalwarts are still calling the stock a "hold" or worse, so there's still room for tailwind-inducing upgrades. 

At the same time, options traders have been more inclined towards puts. Right now, at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ABT's 50-day put/call volume ratio of 0.66 sits in the 71st percentile of its annual range, suggesting a healthier appetite for bearish bets of late.

That being said, now might be the time to bet on ABT's next leg higher with options. The equity's Schaeffer's Volatility Index of 19% is higher than just 16% of all other readings from the past year. This means options traders are pricing in relatively low volatility expectations for the stock right now. 


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