AI Stock Could Come Dangerously Close to Record Lows

The security is down more than 60% in 2022

Digital Content Manager
Nov 3, 2022 at 3:48 PM
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Artificial intelligence (AI) software provider C3.ai Inc (NYSE:AI) is up 0.8% to trade at $12.39 at last check, but earlier today the security was testing a floor at the $12 region, after a recent dip below it had the shares marking an Oct. 13, all-time low of $11.30. The shares have been struggling since August, though, guided lower by the 50-day moving average. Down 60.3% year-to-date, C3.ai stock could continue to face headwinds, especially now that a historically bearish signal is flashing.

AI 50 Day

Digging deeper, C3.ai stock's latest dip comes amid historically low implied volatility (IV). According to a study released by our own Schaeffer’s Senior Quantitative Analyst Rocky White, there have been three similar signals in the past five years when the security was trading within 5% of its 52-week low, while its Schaeffer's Volatility Index (SVI) sat in the 40th percentile of its annual range or lower. This is now the case for AI, which sports an SVI of 69%, which sits higher than just 11% of annual readings.

The equity was negative a month after these signals, averaging a 7% loss. A similar move from its current perch would put the stock at $11.53 -- just shy of its previously mentioned record lows.

An unwinding of optimism in the options pits could crush AI, per its 10-day call/put volume ratio of 30.73 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This reading sits higher than all others from the past 12 months, implying a fierce appetite for long calls of late.

 

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