Don't Sweat Simon Property Group Stock's Pullback

An unwinding of pessimism could push the stock higher, too

Deputy Editor
Jan 18, 2022 at 2:30 PM
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Real estate investment trust (REIT) Simon Property Group Inc (NYSE:SPG) is pulling back with the broader market today, last seen down 2.1% at $152.45, and extending its move away from recent consolidation at the $165 area. While this negative price action has put SPG at a 4.7% year-to-date deficit, below we'll highlight several reasons why investors shouldn't sweat the REIT's dip.

First and foremost, SPG's pullback has put it within one standard deviation of its 80-day moving average, which has had bullish implications for the stock in the past. According to a study conducted by Schaeffer's Senior Quantitative Analyst Rocky White, the stock has seen two similar signals happen in the last three year. One month after each signal, the equity was higher, averaging a 6.9% return in that time period. From SPG's current perch, a move of the same magnitude would put SPG back above the $162 level. 

spg chart jan 18

An unwinding of pessimism in the options pits may put additional wind at the equity's  back. SPG sports a 10-day put/call volume ratio of 1.36 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands in the high 95th percentile of its 12-month range, implying options traders are picking up long puts at a much quicker-than-usual clip.

Echoing this, short-term options traders haven't been more put-biased in the past year. This is per the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.74, which sits higher than all other readings from the past year. 

There's still plenty of  room for analyst upgrades to push the stock higher, too. Of the 16 in coverage, six consider Simon Property Group stock a "hold." 

 




 
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