Historically Bearish Signal Could Stifle Bank Stock's Rally

The equity could move back toward its annual lows

Deputy Editor
Jul 26, 2022 at 12:16 PM
facebook X logo linkedin

Financial services concern U.S. Bancorp (NYSE:USB) is rallying from its July 14 annual low of $43.74, already adding 4.5% month-to-date. USB just came off its second-straight weekly win, and is eyeing its second best monthly performance in a year. However, the security also just moved right into a historically bearish trendline that's stifled similar rallies in the past.

Specifically, U.S. Bancorp stock just came within one standard deviation of its 80-day moving average. According to Schaeffer's Senior Quantitative Analyst Rocky White's latest study, the security has seen five similar signals over the past three years, and was lower one month later 80% of the time, averaging a 5.4% loss for that period. A comparable move from the stock's current perch of $47.86 would place it just above $45.  

USB Chart July 26

The majority of covering analysts are already neutral or outright bearish toward USB, but there remains ample room for optimism to unwind, as five of 17 brokerage firms still rate the security a "buy" or better. Meanwhile, the 12-month consensus price target of $54.94 is a 14.5% premium to the shares' current perch.

Options traders, meanwhile, are already firmly planted in the bearish camp. This is according to U.S. Bancorp stock's 10-day put/call volume ratio of 1.45 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 90% of readings from the past year. In other words, puts are getting picked up at a much quicker-than-usual clip.

Speculating on USB with options could be a prudent play. The stock's Schaeffer's Volatility Index (SVI) of 26% stands in the relatively low 21st percentile of readings from the past year, meaning options traders are still pricing in relatively low volatility expectations for the shares right now. 


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