Bull Signal Flashing for Energy Stock Has Never Been Wrong

If past is precedent, BE could reach two-year highs

Deputy Editor
Aug 31, 2020 at 12:41 PM
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The shares of Bloom Energy Corp (NYSE:BE) are falling this afternoon, down 4.7% at $15.55 at last check, although the exact reason for today's tumble is unknown. What is known is that prior to today, the solid oxide fuel cell technology stock had pulled back to a trendline that, if past is precedent, could send BE higher in the near future.

Specifically, Bloom Energy stock just came within one standard deviation of its 40-day moving average. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, three similar signals have occurred during the past three years. BE was higher one month after 100% of these signals, averaging a one-month return of 28.3%. A similar move, from the security's current perch, would put the equity at $19.95 -- a level the equity hasn't seen in nearly two years.

BE Chart August 31

Meanwhile, BE's options pits have seen an emphasis on calls lately. This is per the stock's 10-day call/put volume ratio of 10.51 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). That ratio stands higher than 78% of readings from the past year, which indicates a particularly healthy appetite for calls at the moment. 

There's plenty of buying power on the sidelines to help fuel the stock's possible rise as well. Specifically, short interest increased by 26.2% in the most recent reporting period to 21.60 million shares, and accounts for a staggering 36% of the equity's total available float. In other words, it would take just over four days to cover these bearish bets at BE's average pace of trading.

Those looking to bet on Bloom Energy stock's next move should consider options. The equity's Schaeffer's Volatility Index (SVI) of 94% stands higher than just 10% of all other readings from the past 12 months. Additionally, the security's Schaeffer's Volatility Scorecard (SVS) is sitting at a whopping 97 out of 100, which means BE has tended to exceed option traders' volatility expectations during the past year -- a boon for option buyers.


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