VST could reclaim a key trendline after testing a historically bullish trendline
Utility giant Vistra Corp (NYSE:VST) is trading 0.7% lower at $156.12 this afternoon, continuing its long-term consolidation below $180. The shares are still riding just below the year-to-date breakeven level, though a floor of support looks to have developed at the $140 mark.
That trendline could soon be cleared though, as a historic bull signal is now flashing for Vistra. According to Schaeffer's Senior Quantitative Analyst Rocky White, VST is trading within 3% of its 24-month moving average after spending the previous five months above that trendline.
This setup has appeared two times during the last 20 years, after which the stock was higher one month later both times, averaging a 9.3% gain, and higher three months later each time, averaging an impressive 9.7% return. From its current perch, a move of this caliber would put VST back around $171 and above its year-to-date breakeven level.
A short squeeze could keep the wind at the equity's back. Short interest increased by 14.3% in the two most recent reporting periods, and the 15.36 million shares sold short account for 4.6% of VST's total available float. At the stock's average pace of trading, it would take shorts over three trading days to buy back their bearish bets.