UNFI's 40-day moving average has helped push the security higher twice before
The shares of grocery wholesaler United Natural Foods Inc (NYSE: UNFI) are up 11.5% at $20.68 at last check, enjoying an impressive 133.9% year-to-date lead. And while the equity has just broken
north of its 20-day moving-average, which had been keeping the stock in check in recent weeks, another historically bullish trendline could help push UNFI even higher on the charts.
Specifically, the food stock pulled back to its 40-day moving average, after several weeks above the trendline in May and early June. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, two similar signals have occurred during the past three years. UNFI
enjoyed positive returns one month after each signal, averaging a 28.1% gain. A similar move from its current perch would put UNFI just above the $27 level, which marks unseen territory for nearly two years.
Short sellers have been flocking in droves. In fact, short interest rose 20.6% in the last two reporting periods, and the 10.17 million shares sold short make up a dramatic 19.3% of the UNFI's available float. In other words, it would take more
than four days at the the security's average pace of trading to buy back these bearish bets.
That sentiment is not echoed in the options pits, where the stock's Schaeffer's put/call open interest ratio (SOIR) comes in at 0.31. This ranks in the 8th percentile of readings from the past year -- highlighting an appetite for calls over puts among
short-term speculators.
Lastly, United Natural Foods stock's Schaeffer's Volatility Scorecard (SVS) sits high at 82
out of 100. This shows the security has far exceeded option traders' volatility expectations during the past year -- a boon for option buyers.