Arch Resources Stock Just Pulled Back to a Key Trendline

An unwinding of pessimism could boost the equity even higher

Deputy Editor
Jun 2, 2022 at 12:22 PM
facebook X logo linkedin


Coal concern Arch Resources Inc (NYSE:ARCH) boasts a solid technical foundation, currently up 84% year-to-date and 185% year-over-year. The shares touched an all-time high of $175.49 on May 4, though they've pulled back over the last month, with a floor forming at the $150 level. There's no reason to fret, however, as this dip has ARCH trading near a historically bullish trendline that could push it back toward its aforementioned peak.

Specifically, Arch Resources stock just came within one standard deviation of its 70-day moving average, after spending considerable time above the trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, similar signals have occurred six times during the past three years, with ARCH averaging an 4.5% gain in half of the occurrences. A similar move from its current perch of $162.70 would put the equity above the $170 level.

ARCH Chart June 2

Options traders have a penchant for bearish bets, and an unwinding of this pessimism could result in additional tailwind for ARCH. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity sports a 10-day put/call volume ratio of 1.42, which stands in the 90th percentile of its annual range. In other words, options traders are picking up puts at a quicker-than-usual clip. The stock's Schaeffer's put/call open interest ratio (SOIR) of 2.49 echoes this, as it sits higher than 98% of readings from the past year. In other words, short-term options traders have rarely been more put-biased. 

The good news for buyers is, Arch Resources stock tends to outperform options traders' volatility expectations. This is per the equity's Schaeffer's Volatility Scorecard (SVS) tally of 79 out of 100.

It's also worth noting that short sellers have hit the exits recently, with short interest down 11.3% in the last two reporting periods. However, the 4.54 million shares sold short make up a hefty 30% of the stock's available float -- nearly a week's worth of pent-up buying power. Should additional shorts jump ship, a short squeeze could add even more support on the charts.

 

 

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