Flashing Bull Signal Could Boost PayPal Stock

PYPL is down over 66% year-over-year

Deputy Editor
Sep 19, 2022 at 12:26 PM
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PayPal Holdings Inc (NASDAQ PYPL) has managed to rebound slightly from its June 30 roughly five-year low of $67.58, though it remains down nearly 66% year-over-year. However, a historically bullish trendline could help the security break above recent pressure at the $100 mark. 

More specifically, PayPal stock just came within one standard deviation of its 40-day moving average. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, at least five similar signals have occurred in the past three years. The equity enjoyed a positive return one month later in 75% of those cases, averaging an 8.7% gain for that period. From its current perch, a move of similar magnitude would put PYPL near $102.72.

PYPL Chart September 19

An unwinding of pessimism could provide tailwinds as well. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), PayPal stock sports a 10-day put/call volume ratio of 0.85, which stands higher than 98% of readings from the past year. In other words, while calls outpace puts on an overall basis, call volume is running at a higher-than-usual volume.

Now could be a good time to speculate with options, too, as the security's Schaeffer's Volatility Scorecard (SVS) sits at an elevated 98 out of 100. This indicates the security has exceeded volatility expectations during the past year.

 

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