DHI's 40-day moving average has helped push the security higher seven times in the past three years
The shares of D. R. Horton Inc (NYSE: DHI) are up 4.5% at $75.01 this afternoon, while enjoying a 50.6% year-over-year lead. And while the construction stock just hit an all-time-high of $77.45 on Aug. 24, which is more than triple its mid-March lows, a historically bullish trendline could help the security surge even higher in the coming weeks.
Specifically, the equity just came within one standard deviation of its 40-day moving average, after spending the past several months above the trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, seven similar signals have occurred during the past three years. DHI enjoyed positive returns one month after each signal, averaging a 5.1% gain. A similar move from its current perch would put the equity just above the $78 level, which marks a territory that has never been reached by DHI before.
Analysts are still split toward the security, with eight of the 15 in question carrying a tepid "hold" or worse rating, and the remaining seven sporting a "strong buy." Meanwhile, the stock’s 12-month average price target comes in at $76.50, which is flat to current levels. In simpler terms, there remains plenty of room for upgrades on DHI in the coming weeks. In fact, just this morning Evercore ISI hikes its price target to $98 from $89.
That lukewarm sentiment is not echoed in the options pits, where calls are preferred. The security sports a 50-day call/put volume ratio of 3.88 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits in the 98th percentile of its annual range, suggesting a healthier-than-usual appetite for long calls of late.
What's more, D. R. Horton stock's Schaeffer's Volatility Scorecard (SVS) sits high at 87 out of 100. In other words, the security has tended to exceed option traders' volatility expectations during the past year -- a boon for options buyers.