Lots of Reasons to Like This Tech Stock

CREE could stay red-hot, a historical signal says

Digital Content Manager
Aug 17, 2020 at 2:23 PM
facebook X logo linkedin

The shares of Cree, Inc. (NASDAQ: CREEare up 0.8% to trade at $72.91 at last check, just a day ahead of its fiscal fourth-quarter earnings report on Tuesday, July 18. Though the security is already enjoying a 57.9% year-to-date lead with support from its 10-day moving average, more upside may soon be on the horizon. That is because the stock's recent seven-year-high of $74.72 on August 11 comes amid historically low implied volatility (IV), which has been a bullish combination for CREE in the past. 

According to data from Schaeffer's Senior Quantitative Analyst Rocky White, there have been two other times in the past five years when the stock was trading within 2% of a 52-week high, while its Schaeffer's Volatility Index (SVI) sat in the 20th percentile of its annual range or lower -- as is the case with CREE's current SVI of 53%, which sits just above the 18th percentile of its 12-month range. The data shows that one month after these signals, the security was higher, averaging a one-month return of 12.3%. From its current perch, a move of similar magnitude would put CREE above the $81 mark, a level that has not been reached since 2013.


Analysts are mostly hesitant toward CREE, with eight of the 12 in coverage carrying a tepid "hold" or worse rating, while the remaining four call it a "buy" or better. Meanwhile, the 12-month consensus target price of $58.15 is a whopping 20.2% discount to current levels, meaning upgrades and/or price-target hikes could be in store for the equity.

A short squeeze could fuel even more tailwinds. Short interest is down 1.7% in the most reporting period, yet the 12.58 million shares sold short make up roughly 12% of the stock's available float, or almost two week's worth of pent-up buying power.

That pessimistic sentiment is echoed in CREE's options pits, where puts are clearly preferred. The security sports a 50-day put/call volume ratio of 1.05 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 93rd percentile of its annual range. This suggests a healthier-than-usual appetite for bearish bets of late, and unwinding of this pessimism could stoke short-term tailwinds.

What's more, CREE's Schaeffer's put/call open interest ratio (SOIR) stands higher than 95% of readings from the past year, implying short-term options traders have been more put-biased than usual. Should some of this pessimism begin to unwind, it could propel the manufacturing stock even higher. 


Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI