A historically bullish signal is flashing for JKS
JinkoSolar Holding Co., Ltd (NYSE:JKS) is sitting out today's rally for the alternative energy sector, last seen down 1.1% at $60.31. In fact, the equity has been cooling off from its July 8 annual peak of $76,92, with recent pressure at its 20-day moving average. Investors shouldn't rush to sell JKS just yet though. The equity's $60 region has stepped in as a recent floor, keeping JKS at an impressive 31.6% year-to-date lead. Plus, the security just pulled back to a historically bullish trendline that could power it even higher in the coming month.
The trendline in question is JinkoSolar stock's 70-day moving average. There have been five other instances within the past three years where JKS came within one standard deviation of this trendline. The solar energy stock was higher one month after 71% of these occurrences, averaging an impressive 18.2% return during that time period. From its current perch, a move of similar magnitude would put the equity at $71.29, well above recent pressure at its 20-day moving average and closer to its aforementioned early July peak.
An unwinding of pessimism among options traders could also put wind at JKS' back. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security sports a 10-day put/call open interest ratio of 1.22, which sits higher than all but 8% of readings from the past year. In other words, puts have rarely been more popular of late.
Speaking of options, now may be the ideal time to speculate on JKS' next move with calls. The equity's Schaeffer's Volatility Index (SVI) of 71% stands higher than only 14% of all other annual readings. This implies options traders are pricing in relatively low volatility expectations at the moment.