Foot Locker stock is approaching a historically bearish trendline
Retail stock Foot Locker Inc (NYSE:FL) surged 10.6% on Monday, buoyed by the surprise deal between the U.S. and China to slash tariffs by 115% for 90 days. Today, FL is up 0.8% to trade at $13.39, and is now up 8.7% so far in May. However, the equity is still saddled with a 41.3% year-over-year deficit and down 38.7% year-to-date. Plus, if history is any guide, a pullback could be ahead.
Foot Locker stock is now within striking distance of a historically bearish trendline: its 50-day moving average. According to Schaeffer’s Senior Quantitative Analyst Rocky White, FL has made similar approaches to this trendline nine other times in the past three years. Following 77% of those signals, the stock was lower one month later, averaging a 6.5% drop. A comparable move from FL’s current perch would put the shares just below $12.50, nearing their April 16, more than 15-year low of $11.
A shift in sentiment in the options pits could accelerate the pressure. Foot Locker stock’s 10-day put/call volume ratio of 14.77 over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 96th percentile of annual readings, which indicates short-term options traders are far more bullish than usual. That kind of lopsided optimism can create headwinds in the event of a pullback.