Pure Storage Stock Could Soon Run Towards Record Highs

The equity looks ripe for a short squeeze, too

Digital Content Manager
Nov 1, 2021 at 3:23 PM
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The shares of Pure Storage Inc (NYSE:PSTG) are up 0.7% to trade at $27.04 at last check, and earlier today broke through a familiar ceiling at the $27.50 level. The equity has come closer to its Feb. 16, all-time high of $29.54 since bouncing off the $24 area, and sports a 67.6% year-over-year lead. There is reason to believe Pure Storage stock could come just shy of that record in the near future, too, as the security is now flashing a historically bullish trendline.

More specifically, Pure Storage stock just came within one standard deviation of its 40-day moving average, after some time spent above this key trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, 10 similar signals have been seen in the past three years. PSTG enjoyed a positive return one month later in 78% of those instances, averaging a 7.6% gain. From its current perch, a similar move would put the stock back at $29.09 -- within a chip shot of its all-time highs.

PSTG 40 Day

The security looks ripe for a short squeeze, too. Short interest rose 23% during the last two reporting periods, and the 21.22 million shares sold short now account for 7.9% of Pure Storage stock's available float, or over a week's worth of pent-up buying power.

An unwinding of pessimism over in the options pits could push the security even higher. This is per PSTG's 50-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 93% of reading in its annual range. This suggests long puts have been getting picked up at a faster-than-usual clip. 

Now could be an ideal time to bet on Pure Storage stock's next move with options. The equity's Schaeffer's Volatility Index (SVI) of 39% stands higher than only 8% of readings from the last year, indicating the options market is pricing in low volatility expectations at the moment.

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