An unwinding of bearish sentiment in the options pits may fuel additional gains
Fintech giant Affirm Holdings Inc (NASDAQ:AFRM) is 3% lower to trade at $46.87 this afternoon, heading for a third consecutive loss and adding more weight to its already steep 28.3% year-to-date deficit. The equity's recent fall from its Feb. 18, three-year high of $82.52 may be short-lived, however, as a new bull signal is now flashing.
According to Schaeffer's Senior Quantitative Analyst Rocky White, AFRM is trading within one standard deviation of its 200-day moving average, a move that has produced gains in the past. This comes after a prolonged period above this trendline (defined by White as 80% of the time in the past two months and eight of the last 10 trading days).
A similar move occurred four times in the past three years, after which Affirm stock was higher a month later 75% of the time, averaging a 27.8% gain. From its current perch, this would place the stock just below $60 for the first time in weeks.
An unwinding of pessimism in the options pits could be a tailwind for the shares. Specifically, at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 1.08 sits higher than 96% of annual readings.