Bullish Trendline Signals Good Things Ahead for Chegg Stock

Analyst optimism is surrounding Chegg stock

Deputy Editor
Jul 15, 2020 at 1:14 PM
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The shares of education technology company Chegg Inc (NYSE:CHGG) are moving  higher this afternoon, up 1.3% at $70.11, just two sessions off their July 13, all-time high of $77.42. While yesterday's stumble put the security at a two-week low, it also put the stock directly in line with a historically bullish trendline on the charts, which could easily push CHGG back into all-time high territory. 

Specifically, Chegg stock just came within one standard deviation of its 40-day moving average -- a trendline that's also acted as support since an early-May bull gap sent the stock soaring. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, five similar signals have occurred during the past three years. Chegg stock was higher one month after 60% of these signals, averaging a one-month return of 5.7%. A similar move, from the security's current perch, would put CHGG just above the $74 mark. 

CHGG Chart July 15

There's still ample optimism surrounding CHGG. Firstly, analyst sentiment leans bullish, with 9 of the 13 in coverage calling it a "buy" or better. Meanwhile, short interest is down 17.1% in the last reporting period, and the 12.87 million shares sold short represent 10.9% of the stock's available float, or a little over three days' worth of pent-up buying power, at the equity's average pace of trading. 

 

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