Bull notes could help YUM conquer recent resistance
The shares of Yum! Brands Inc (NYSE:YUM) are up 0.8% to trade at $145.07 at last glance while sporting an 8.7% year-to-date lead. Pressure at the 20-day moving average is keeping a lid on today's gains, while the $153 region has acted as a ceiling since the stock's April 4 bear gap of 8.4%. The shares are now trading within striking distance of a historically bullish trendline, however, which may help it close that bear gap.
Per Schaeffer's Senior Quantitative Analyst Rocky White, the security is within one standard deviation of its 126-day moving average (representing half a year of trading). YUM was above this this trendline in at least eight of the last 10 trading days and spent 80% of the last two months above it. Within these parameters, five other signals occurred in the past five years, after which the equity was higher one month later every time, averaging a 3.9% pop. A move of comparable magnitude would place YUM back above $150.
A round of bull notes could create tailwinds and help get YUM the rest of the way through overhead pressure at $140. Of the 27 analysts in coverage, 20 still call the equity a tepid "hold" rating.
Options are looking affordable as well, per the stock's Schaeffer's Volatility Index (SVI) of 18%, which ranks in the 12th percentile of its annual range. This means options traders are pricing in low volatility expectations. YUM has also tended to outperform these expectations, per its Schaeffer's Volatility Scorecard (SVS) of 83 out of 100.