Bull Signal Flashing for Outperforming Energy Stock

The stock is fresh off a seven-year high

Deputy Editor
Jun 6, 2022 at 1:45 PM
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SM Energy Co (NYSE:SM) is up 4.3% to trade at $52.37 at last glance, not too far from its recent May 31, seven-year high of $52.95. The independent energy stock could be getting a boost alongside several solar stocks after President Joe Biden today declared a 24-month tariff exemption for solar panel components from Cambodia, Malaysia, Thailand, and Vietnam.

SM June6

SM could see even more tailwinds ahead, however, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. Its end-of-May peak comes amid historically low implied volatility (IV) -- a combination that has been bullish for the stock in the past. According to White's modeling, there were seven other instances in the past five years when the stock was trading within 2% of its 52-week high, while its Schaeffer's Volatility Index (SVI) sat in the 20th annual percentile or lower -- as is the case with the stock's current SVI of 69%, which sits in the low 4th percentile of its 12-month range.

The data shows that one month after that signal, the mining stock was up 5.1%, with 57% of the returns positive. Up 121.5% year-over-year and 78.6% so far in 2022, SM Energy stock could continue its outperformance. 

An unwinding of pessimism in the options pits could push SM higher, too. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security sports a 10-day put/call volume ratio of 1.31, which sits higher than 81% of readings from the past year. 

 

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