The retailer terminated acquisition talks yesterday
Shares of Macy's Inc (NYSE:M) are up 0.4% to trade at $16.92 at last check, brushing off a price-target cut to $17 from $22 at ISI Evercore. The stock suffered a massive bear gap on the charts yesterday, after ending acquisition talks with Arkhouse Management Brigade Capital Management. While M carries a roughly 16% year-to-date deficit, it might not be time to shy away from the retail giant just yet.
Macy's stock is a flashing a historically bullish signal on the charts. According to a study from Schaeffer's Senior Quantitative Analyst Rocky White, shares are within 2% of their 320-day moving average. The study shows two similar occurrences over the past three years. The stock was higher one month after both of these signals, averaging a 10.2% gain. From its current perch, a similar jump would place M above $18.60.
An unwinding of pessimism amongst options traders could provide additional support. Over At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day put/call volume ratio ranks higher than 98% of readings from the past year, meaning puts have been picked up at a much faster-than-usual rate.
Now might be an ideal time to speculate on the stock's next move with options. M sports a Schaeffer's Volatility index (SVI) of 45%, which stands higher than 13% of readings from the past 12 months. In other words, options traders are pricing in relatively low volatility expectations at the moment.