PayPal stock has come into contact with a historically bearish trendline
PayPal Holdings Inc (NASDAQ:PYPL) stock has been trading within a short range since its late-July bear gap, staying roughly between the $66 and $70 levels. Overhead resistance moved in at the 126-day moving average (which represents half a year of trading) could spell trouble for the stock, however, given that it's preceded bearish activity in the past.
Per Schaeffer's Senior Quantitative Analyst Rocky White, PYPL has traded below this trendline in at least eight of the last 10 trading days after spending 80% of the last two months beneath it. Within these parameters, five other signals occurred in the past five years, after which the equity was lower one month later 80% of the time, averaging a 7.2% drop. A move of similar magnitude from PYPL's current perch at $67.90 would push it down to $63, a level not seen since April.
From a contrarian standpoint, an unwinding of bullish sentiment amongst options traders could provide headwinds as well. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), both PYPL's 10-day call/put volume ratio of 6.65 and 50-day call/volume ratio of 3.87 rank higher than all other readings from the past year.