KB Home stock has pulled back to its 126-day moving average
KB Home (NYSE:KBH) stock is slipping today, down 1.6% at $77.19 at last glance. The stock is mirroring a familiar pattern since mid-July, however, as it's consistently pulled back to the $78 region before a short-term bounce. This time around, long-term support at the 126-day moving average lingers below as well.
Per Schaeffer's Senior Quantitative Analyst Rocky White, the homebuilding name has come within striking distance of its 126-day trendline four other times in the past three years, after trading above the moving average 80% of the time over the past two months, and closing north of the trendline in eight of the last 10 sessions. The stock moved higher after two of those instances, averaging a hefty 8.9% return one month later.
An unwinding of pessimism amongst options traders could provide tailwinds as well. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), KBH's 50-day put/call volume ratio of 1.55 ranks higher than 80% of readings from the past year.
Plus, short interest represents a large 9.5% of the stock's available float. It would take shorts nearly five days to cover their bearish bets, at KBH's average pace of trading.