This flashing bull signal has never been wrong for PATH
Shares of UiPath Inc (NYSE:PATH) are 1% higher trade at $13.53 this afternoon, extending its recent consolidation below the $14 level. PATH remains 17% lower year-to-date, pulling back nearly 30% from its early September highs. There may be a light at the end of the tunnel, however, as a historically bullish signal is now flashing.
Per Schaeffer's Senior Quantitative Analyst Rocky White, UiPath stock has traded within 0.75 times the 260-day moving average's 20-day average true range (ATR) after spending at least 80% of the previous two weeks and 80% of the prior 42 trading sessions above the trendline.
This setup has appeared two times over the last 10 years, after which the stock was higher one month later both times, averaging a 7.8% gain. From its current perch, a move of this magnitude would put PATH back above the $14 threshold.
Options traders have been pessimistic at best. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), UiPath stock's 50-day put/call volume ratio ranks higher than 86% of annual readings. Echoing this, the stock's Schaeffer's put/call open interest ratio (SOIR) sits above 91% of readings from the past 12 months.
Shorts have been retreating, with short interest falling 14.9% during the past two reporting periods. At the stock's average pace of daily trading, it would take short sellers less than two days to buy back their bearish bets.
There is plenty of room for bull notes, too. Currently 18 of the 20 brokerages in coverage sport a "hold" or "sell" recommendation. Should this bearish sentiment begin to unwind, it could trigger a fresh round of upgrades for PATH.
Lastly, options are affordably priced as well. Specifically, the software stock's Schaeffer’s Volatility Index (SVI) of 57% stands in the 14th percentile of its annual range.