Now looks like the time to buy the dip on LC
Consumer lending stock LendingClub Corp (NYSE:LC) is sharply lower, down 5.8% at $15.17 at last glance and headed for a sixth-straight daily loss. A reason for this negative price action is unclear, but such a sharp drop is sure to reel in some investors looking to buy in on the dip, especially with the stock still up roughly 32.6% year over year.
For those betting on a bounce, LendingClub stock is flashing a historically bullish signal. More specifically, the stock is within 0.75 of the 50-day moving average's 20-day average true range (ATR), after spending at least 80% of the last 10 days and 80% of the last two months above it. This has happened seven other times over the past three years, after which the equity was higher one month later 57% of the time, averaging a giant 23.9% gain.
A move of similar magnitude from its current perch would put LC at $18.79, around the level that rejected the shares in December, January, and also earlier this month. So even if it can't quite break above that ceiling, it will likely run back up toward it, as the equity is no stranger to a V-shaped rally. With that in mind, now might be a good time to weigh in with options.
The security is seeing attractively priced premium. LC's Schaeffer's Volatility Index (SVI) of 44% ranks in the low 9th percentile of its annual range, meaning options traders are pricing in low volatility expectations.
An unwinding of short interest could also provide tailwinds. Of LC's available float, 5% is sold short, which is over three days worth of pent-up buying power at the stock's average pace of trading.