"... SPY remains locked in a trading range that began with a weekly expiration Friday sell-off on Sept. 9. Since that date -- a period that has encompassed 31 trading days -- SPY has closed between $212 and $217 on 30 of those days... Additional resistance is in the $219.50 area, the August-September peak, which is: 1) 20% above the February 2016 low; 2) 10% above the late-June "Brexit" trough; and 3) just below the round number $220 level that equates to the 2,200 century mark on the S&P 500 Index (SPX).

"... there is strong support below. In addition to the importance of $212... the 125-day moving average -- a generally under-the-radar indicator -- is situated just above $212. This moving average equates to about six months of trading. It's not a widely followed trendline, but it's one that played an important role on a multitude of pullbacks from 2013 through the third quarter of 2015... A strong rally from this moving average, followed by a breakout above the August and September highs, would potentially indicate the market is about to embark upon a trending phase higher. But, buyer beware; breaks of this trendline have sometimes led to sharp, short-term selloffs of 5-10%."
-- Monday Morning Outlook, October 24, 2016

Not much has changed since our last commentary -- except for the fact that, since a Friday sell-off on Sept. 9, the SPDR S&P 500 ETF Trust (SPY - 212.54) has now closed between $212 and $217 in 34 of 35 trading days. The support levels we discussed last week remain intact, albeit barely. One thing we did not mention last week, for you Fibonacci retracement followers, is that the $212 area represents a 38.2% Fibonacci retracement of the late-June closing low and August/September highs.

Midday Friday headlines indicated there may be more to the email debacle of presidential candidate Hillary Clinton, as news surfaced that FBI Director James Comey wrote a letter to a congressional committee indicating additional steps in the investigation should be taken. Evidently, additional emails were found in the course of a separate inquiry into former Rep. Anthony Weiner, the husband of top Clinton aide Huma Abedin, but it was not yet known whether the emails were material. Later in the afternoon, about an hour before the market's close, reports indicated that the emails did not appear to be from her private server.

The initial headlines sent the SPY swiftly lower, from the 214 strike to support in the $212 area. Meanwhile, the CBOE Volatility Index (VIX - 16.19) quickly spiked from 14.70 to 16.00 in a matter of minutes.  

The VIX advance last week and pop on Friday is interesting, in that it tracks closely with what VIX has done historically in the run-up to a presidential election. In the graph below, we capture the average VIX action in the two weeks before presidential election day and the two weeks after presidential election day, beginning with 1992. The VIX usually peaks six trading days before the election.

In other words, if the VIX follows its historical pattern, as it has done so far, its short-term peak would occur today and be followed by a decline to the 12 area by the middle of November. For equity exchange-traded fund (ETF) and index premium sellers, this chart is noteworthy.

Turning to the SPY, a couple of technical patterns on a daily chart are indicating the potential for a breakout from the $212-$217 range could be on the horizon, although these patterns are in conflict in terms of the direction of the breakout.

For example, as we diagrammed on the daily chart below, a bearish "descending triangle" is emerging. A close below the $212 level would heighten the chances for a move to the $205 area in the short term.

However, as we mentioned last week, there is strong potential support in the round $210 area. In fact, if support did emerge in this area, a bullish "falling wedge" pattern would be in play. A bullish falling wedge is corrective behavior that follows a directional move higher, such as the rally from the late-June low to the early September peak. The base of this wedge is currently just above the round 210 strike, as you can see on the dotted line in the graph below.  

Finally, we compiled S&P 500 Index (SPX - 2,126.41) component total short interest data as of mid-October. In this latest report, short interest declined, following increases in prior reports. This data could be a welcome sign for bulls, as builds in short interest have pressured stocks. Continued short covering as we approach the final stretch of election-related uncertainty could be supportive of stocks, as we enter a traditionally strong seasonality period for equities. That said, if you are a short-term trader, be open to all possibilities -- especially with conflicting technical direction patterns at work.

Continue reading:

• Indicator of the Week: The 20 Best (And Worst) Stocks to Own Until April
  
• The Week Ahead: Facebook Earnings, Jobs Data Headline Busy Week

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Analysts are weighing in on electric car maker Tesla Motors Inc (NASDAQ:TSLA), tech stock Oclaro, Inc. (NASDAQ:OCLR), and video game expert Electronic Arts Inc. (NASDAQ:EA) . Here's a quick roundup of today's bullish brokerage notes for TSLA, OCLR, and EA.

• TSLA is edging lower ahead of the open, even after Baird reiterated its "outperform" assessment and its $338 price target -- a 77% premium to last night's close of $190.79, and in all-time-high territory. The brokerage firm believes shareholders will approve Tesla Motors Inc's proposed merger with SolarCity Corp (NASDAQ:SCTY), which could benefit Tesla in a number of ways. This upbeat note came after Tesla said it expects the deal to add at least $500 million to its balance sheet over the next three years. The stock still has to win over plenty more analysts, though, since just three of 17 recommending buying it. The generally bearish outlook among brokerage firms may have something to do with the fact that TSLA is down 20.5% year-to-date.

• OCLR is set to add 11% when the market opens, after the company topped Wall Street's consensus earnings estimate. In response, no fewer than six brokerage firms raised their price targets, with B. Riley setting the highest mark at $13.50. This represents territory Oclaro, Inc. hasn't seen since early 2011, but considering the stock has surged 132% in the past 12 months to trade at $7.34, an extended move higher doesn't seem too far-fetched. Call buyers would certainly like to see the stock continue to gain, since roughly four calls have been bought to open for every put during the past 20 sessions at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX).

• EA is also eyeing a post-earnings rally, after the video game maker posted strong quarterly results and raised its full-year outlook. So far, only Barclays has weighed in on EA -- which is up 3% ahead of the bell -- raising its price target to $94 from $88, representing all-time-high territory. Year-to-date, Electronic Arts Inc. is up 13% at $77.84, and hit a record high of $86.07 early last month. Considering all this, short sellers may be questioning their positions. There are nearly 20 million EA shares currently sold short, and it would take eight sessions for bears to buy back these positions, based on the stock's average daily volumes. 

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U.S. stocks are signaling a rocky start, with disappointing private payrolls data weighing on futures. Among specific equities in focus today are Chinese e-tailer Alibaba Group Holding Ltd (NYSE:BABA), consumer review site Yelp Inc (NYSE:YELP), and drug stock Valeant Pharmaceuticals Intl Inc (NYSE:VRX). Here's a quick look at what's driving BABA, YELP, and VRX.

• BABA reported better-than-expected earnings, and is now poised to pop 3.2% at the open. This comes just a day after the shares were pressured amid whistleblower rumblings. This morning's expected gains are nothing new for Alibaba Group Holding Ltd, which has advanced 24.5% year-to-date at $101.15. Meanwhile, the e-commerce stock could catch a tailwind if short sellers begin heading for the exits. Specifically, short interest accounts for 11% of BABA's float, which -- at the stock's average trading volume -- would take close to two weeks to cover.

• YELP is perched 11.5% higher pre-market, following an unexpected quarterly profit and upbeat fourth-quarter guidance. Already at last night's close of $32.48, the shares were up nearly 13% year-to-date -- though, they've been pulling back since notching an early October annual high of $43.36. If Yelp Inc can resume its longer-term uptrend, there's room for potential analyst upgrades to add fuel to the fire. Of the 27 brokerage firms tracking the stock, 15 rate it a "hold" or a "strong sell."

• VRX is staring at a pre-market loss of 3.6%, after the drugmaker announced it's in talks to sell its Salix stomach-drug unit and other assets. This would be more of the same for a stock that's plunged 76.5% year-to-date at $23.86. Suffice it to say, option bulls could get spooked by Valeant Pharmaceuticals Intl Inc's latest setback. During the past 10 weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 2.17 VRX calls for each put -- a ratio ranking just 3 percentage points from an annual high.

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Analysts are weighing in on biotech stock Gilead Sciences, Inc. (NASDAQ:GILD), healthcare concern Adeptus Health Inc (NYSE:ADPT), and tech expert Tableau Software Inc (NYSE:DATA). Here's a quick roundup of today's bearish brokerage notes on GILD, ADPT, and DATA.

• Analysts are trimming their expectations for GILD, after the company's disappointing quarterly results. For instance, Leerink was one of at least six brokerage firms to cut its price target, lowering its mark to $89 from $94. Of course, that's still well above GILD's current trading level of $72.97, down 1.5% today. Nevertheless, it's been an ugly year for Gilead Sciences, Inc. stock, falling 27%. Making matters worse, it would seem GILD is vulnerable to a round of downgrades, as 11 of 20 brokerage firms recommend buying the shares, and none give them a "sell" rating. 

• ADPT is plummeting 61.6% to $10.33 -- just off a new record low of $10.10 -- after law firms Johnson & Weaver, LLP and Glancy Prongay & Murray LLP both announced investigations into whether the company violated federal securities laws. Meanwhile, Adeptus Health Inc woefully missed Wall Street's earnings estimates, and said "we have engaged Goldman Sachs to explore various financing alternatives." As such, Jefferies slashed its price target to $13 from $77 and downgraded the stock to "hold" from "buy," while BofA-Merrill Lynch downgraded it to "underperform." Keybanc also chimed its with a price-target cut to $31 from $59. This is all fantastic news for short sellers, though, who control over half of the stock's total float, and who have watched the stock lose roughly 86% of its value since its May high above $73. 

• DATA is in the midst of a post-earnings slide of its own, as Wall Street punishes the stock for its quarterly revenue miss. No fewer than 18 brokerage firms have already reduced their price targets, with the lowest mark coming from Maxim, at $24. As such, Tableau Software Inc is off 11.9% at $43.61, though it had already been struggling amid overhead pressure from its 200-day moving average -- even as M&A rumors swirl. At the same time, short interest increased by almost 25% in the latest reporting period, so today's sell-off isn't bad news for everyone. 

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Yesterday, the S&P 500 Index (SPX) and Nasdaq Composite (COMP) both notched a sixth consecutive daily loss amid ongoing pre-election jitters. What might this mean for the indexes going forward? We'll take a closer look below.

Schaeffer's Senior Quantitative Analyst Rocky White created the chart below, which accounts for all SPX losing streaks of at least six sessions, dating back to 1990. As you can see, the longest cold streaks over the past 26 years have lasted eight trading days. Going back further, though, the longest-ever losing streak was 12 sessions (May 1966).

The most recent time the SPX went cold for this long was last August, and its losses over that period were a much sharper 11.2% (compared to a current loss of just 1.8%, which is historically pretty tame). Fortunately for bulls, the rebound was strong. The session after that sixth down day, the broad-market benchmark jumped 3.9%. One month out, the index had given up a portion of those gains, but was still up 3.5%. The two charts below reveal that outperformance is the norm following SPX losing streaks:

On average, after the sixth down day, the SPX typically returns over 0.4% on the next session, compared to an average anytime return of 0.03%. What's more, the percentage positive is 75%, compared to an anytime figure of 53.3%. One month out, the S&P's average advance is an even more impressive 2.3%, with 70% positive. By comparison, the index usually gains only 0.7% over a single-month period, and the percentage positive is a more modest 61.9%.

If we repeat the same exercise for the COMP, the results are very similar. However, one key difference is the much higher frequency of losing streaks on the tech-heavy index, with 39 returns versus 20 for the S&P 500. Again, the longest streak since 1990 is eight trading days, but the lengthiest streak ever is double that, at 16 sessions (February 1984).

Based on the data above, the current cold streak is the COMP's third of 2016, and both of the prior ones lasted a little longer. January's pullback was particularly rough, with the index down another 8.7% one month out. Historically, however, the Nasdaq has tended to snap back more quickly than it has this year, per the numbers below:

As you can see, the day after a six-session losing streak, the COMP has been positive over 56% of the time, with an average gain of 0.2% -- besting the anytime figures of 54.7% and 0.05%, respectively. The outperformance tends to persist for a couple weeks, but by a month, that trend wanes and the anytime numbers are actually superior.

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It's been a dismal start to November for oil stock Chesapeake Energy Corporation (NYSE:CHK), with the shares down 6% since Monday's close to trade at $5.18, lingering near their lowest level since early August. However, this is just par for the course for CHK stock, which has turned in the worst November performance of any S&P 500 Index (SPX) component over the past 10 years. Nevertheless, with CHK's third-quarter earnings report due tomorrow morning, CHK options traders have been eyeing a near-term bounce -- targeting out-of-the-money front-month calls in recent weeks.

Taking a quick step back, speculative players have shown a preference for calls over puts among options set to expire in three months or less, per CHK's Schaeffer's put/call open interest ratio (SOIR) of 0.97. What's more, this ratio ranks in the 24th annual percentile, meaning traders are more call-heavy than usual toward the energy stock.

In the past 10 sessions, specifically, CHK's November 7 strike has seen the largest rise in call open interest, with 11,904 contracts added. In fact, this strike is home to peak open interest in the front-month series, with 22,050 contracts outstanding. According to the major options exchanges, a large portion of this activity has been of the buy-to-open kind, meaning call buyers are anticipating a breakout above $7 by expiration at the close on Friday, Nov. 18.

Today, CHK options traders are targeting even nearer-term options. Amid relatively light volume, the stock's weekly 11/4 5.50-strike call has seen the most action, with 1,301 contracts on the tape so far. It looks like some of these calls are being bought to open, as traders eye a move north of the strike by this Friday's close, when the weekly options expire.

Considering more than 15% of CHK's float is sold short -- up nearly 6% in the most recent reporting period -- there could be an ulterior motive to the call buying. Specifically, short sellers could be purchasing the out-of-the-money strikes to hedge their bearish bets against any potential post-earnings upside for the security.

Historically, the shares have tended to make big moves the session subsequent to reporting -- although it's been a coin toss as to which side of the ledger CHK lands. Including a 12.1% drop in August 2015 and a 22.8% pop in February, the stock has averaged a single-session post-earnings move of 8.1% in the past eight quarters. This time around, the options market is pricing in a loftier 12.6% swing -- regardless of direction -- for shares of Chesapeake Energy Corporation (NYSE:CHK).

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Facebook Inc (NASDAQ:FB) is set to report third-quarter earnings after the close tonight, and expectations are running sky high. And why not? Facebook has topped consensus estimates in every quarter but one since going public in 2012 -- amid what one analyst said was a "virtually insurmountable competitive advantage." Moreover, FB stock has made a move to the upside in the session subsequent to reporting earnings in each of the past four quarters, averaging a gain of 7.2%. Given the tech stock's impressive feats both on and off the charts, it's little surprise that options traders and analysts are largely in FB's bullish corner.

Getting back to FB's earnings history for a moment, the company has beat FactSet profit estimates by 19%, 24%, and 17% over the past three quarters, respectively, and last quarter, exceeded the average revenue forecast by 7%. Currently, analysts are estimating earnings of 97 cents per share for FB's third quarter on sales of $6.9 billion. As indicated, the stock has a history of making notable post-earnings moves, averaging a single-day post-earnings swing of 5.2% over the last eight quarters. Thjs time around, the options market is pricing in an even wider move of 8.3% for tomorrow's trading.

Taking a closer look at FB's options pits, volume is running slightly above average today, with roughly 89,000 contracts on the tape so far, versus an expected 69,000. Dominating the action is the weekly 11/4 series, which expires at this Friday's close. Most active thus far is the weekly 11/4 133-strike call, where there appears to be some  buy-to-open action happening. Buyers of the call are betting on the shares rallying beyond $133 -- and into record-high territory -- by the week's end.

Call buying has certainly been popular in recent weeks, with 241,861 calls bought to open over the past 10 sessions on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), compared to 121,166 puts. The resulting call/put volume ratio of 2.00 sits higher than 81% of the past year's readings. And speculators continue to target new highs for the stock. Among options with the largest increases in open interest over the past two weeks is the weekly 11/4 135-strike call, with 13,359 contracts added.

Optimism is clear among the brokerage bunch, too. Out of 30 firms providing coverage, 28 call FB a "buy" or better, and not one analyst recommends selling the shares. Moreover, the average 12-month price target of $156.76 sits well into never-before-seen territory.

Facebook Inc (NASDAQ:FB) has been a technical beast over the past three years, steadily charging up the charts, and hitting a record high of $133.50 on Oct. 25. Though the shares are off 0.8% at $128.41 today, they have added almost 23% so far in 2016, and are sitting comfortably atop support at their 10-week moving average, as well as their long-term ally, the 32-week moving average.

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It's the worst day ever for Cempra Inc (NASDAQ:CEMP). The drug stock is down 48.8% at $9.55, on the short-sale restricted list, and earlier touched a two-year-low of $9.26, after the U.S. Food and Drug Administration (FDA) red-flagged the company's pneumonia drug, citing a "significant safety signal for hepatotoxicity." Amid a turbulent and heavy-volume session, options activity has spiked on CEMP.

At last check, total intraday options volume was running at nine times the usual rate, and poised to touch an annual high by session's end. What's more, CEMP's 30-day at-the-money implied volatility has jumped to 196.9%, also a 12-month peak.

Digging deeper, opening activity is detected at the now out-of-the-money November 12.50 call. With 86% going off at the bid, it seems safe to assume sellers are in the driver's seat, banking on CEMP staying below $12.50 through front-month expiration, at the close on Friday, Nov. 18.

This is more of the same for the stock, according to data from the major options exchanges. Specifically, during the past 10 sessions, traders have sold to open 5,266 CEMP calls, outweighing the 4,513 contracts that were bought to open.

Overall, however, puts have been the options of choice in recent weeks, likely exacerbated by a post-earnings plunge late last month. The stock's 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is 1.03 -- in the top quartile of its annual range. What's more, Cempra's Schaeffer's put/call open interest ratio (SOIR) of 0.83 sits just 4 percentage points from a 52-week peak, hinting at relatively put-skewed short-term open interest levels.

These bearish options bettors are joined by plenty of short sellers. Specifically, 18.3% of Cempra Inc's (NASDAQ:CEMP) float is dedicated to short interest, the highest level since early April. What's more, it would take nearly two weeks to buy back these positions, based on the stock's average daily trading volume.

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Alibaba Group Holding Ltd (NYSE:BABA) is down 1.6% at $100.07, after the New York Post reported a "high-up" at the e-tailer is helping the Securities and Exchange Commission (SEC) with its accounting probe. One inside source added the SEC "may be using other whistleblowers," too. Amid this drama, and ahead of tomorrow morning's earnings report, BABA options are trading at a brisk pace.

Jumping right in, Alibaba put options are changing hands at triple the typical intraday rate, and put volume registers in the 98th percentile of its annual range. The strike seeing the clearest buy-to-open activity is the deep out-of-the-money December 80 put. By purchasing these options, traders may be banking on a selloff through back-month expiration, at the close on Friday, Dec. 16. Alternatively, the buyers may be BABA shareholders hedging against a post-earnings plunge.

Longer term, calls have been the options of choice among BABA traders. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open 2.71 calls for every put during the last 50 sessions -- a ratio that ranks in the high 91st annual percentile.

It's hard to blame options players for being upbeat. The stock has fared well in the aftermath of earnings, historically speaking, finishing the ensuing session higher five times over the past eight quarters. Last time around, in fact, BABA surged 5.1% in the session after earnings.

What's more, Alibaba Group Holding Ltd (NYSE:BABA) has come a long way in 2016. Year-to-date, the shares have trekked 23% higher, and late last month touched an annual peak of $109.87.

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With help from Schaeffer's Senior Quantitative Analyst Rocky White, we've been sifting through historical returns for stocks in November. Earlier, we took a look at two bank stocks that have historically struggled during the month. Now, let's take a more positive spin and examine stocks that have typically outperformed in November. Based on the data, one stock that stood out was delivery specialist FedEx Corporation (NYSE:FDX). 

First of all, FDX stock has finished higher in eight of the past 10 Novembers, per the chart immediately below. What's more, the stock sports an average single-month return of 3.7%.

With this in mind, the shares' already strong technical setup looks that much more promising. Specifically, FDX is almost 15% higher in 2016 at $170.84. Also, a recent pullback has been contained by the $169-$170 level -- corresponding with the stock's April and August highs, the opening price of its late-September post-earnings bull gap, and the rising 50-day moving average. 

What's also notable about FedEx stock is that it has seen a huge influx in short interest in recent months. Since early May, this figure has increased by 60%, and now more than three days' worth of buying power is controlled by short sellers, based on average daily volumes. A quick exit from these bearish traders would provide an extra boost for FDX shares. 

It's also interesting to note that short-term options traders have taken an unusually put-focused stance toward the stock. The Schaeffer's put/call open interest ratio (SOIR) for FDX currently stands at 1.82, revealing put open interest among options expiring within three months nearly doubles call open interest. More telling still, this SOIR tops three-fourths of readings from the past year, suggesting FDX could get a lift as these seemingly bearish positions unwind. 

Finally, one of the most attractive aspects of FedEx Corporation (NYSE:FDX) options at the moment is the fact that the stock's Schaeffer's Volatility Scorecard (SVS) comes in at a sky-high 99 -- suggesting the options market has regularly underestimated the stock's ability to make outsized moves in the past year. What's more, FDX's Schaeffer's Volatility Index (SVI) of 20% ranks below 76% of comparable marks from the past year, hinting at unusually low volatility expectations. 

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One week from today, U.S. voters will head to the polls to elect the next president. Historically, while the Dow Jones Industrial Average (DJIA) tends to perform better than usual heading into the election, one sector tends to underperform -- and quite dramatically: utilities. Below, we'll take a look at historical Dow performance, as well as the 25 worst stocks to own in the week ahead of the election.

According to Schaeffer's Senior Quantitative Analyst Rocky White, the Dow averages a one-week pre-election return of 1.53%, going back to 1900 (using calendar days, and excluding 1914, when the market was closed for WWI). Further, the blue-chip index has been positive more than three-quarters of the time, with the average negative return just -0.41%. The week tends to be less volatile than usual, too, with a standard deviation of 1.87%. (However, buyers may want to wait before jumping on this pair of historical November blue-chip duds.)

For comparison, in these same weeks during non-election years, the Dow has averaged a gain of 1.05%, and has been positive 65.1% of the time. The average negative return is steeper in non-election years, at -1.49%, and standard deviation is higher at 2.69%. It's also worth noting that the week after the second Tuesday of November tends to be pretty ho-hum for the DJIA, election or not. In election years, the index averages a gain of just 0.08%, but that's still better than an anytime loss of 0.26%.

The Dow's outperformance ahead of elections makes the underperformance of utilities all the more interesting. Below are the 25 worst historical performers in the week leading up to a presidential election, going back to 2000 (four elections, based on calendar days). They're sorted by percent positive, and then average return. As you can see, "Utility Electric" and "Utility Gas" stocks account for 15 of those stocks, and seven of the eight stocks that have been positive 0% of the time during these weeks. 

Pennsylvania-based gas-and-electric concern PPL Corp (NYSE:PPL) leads the pack, averaging a steep loss of 3.77%. Not far behind is Atlanta-based Southern Company (NYSE:SO) -- a provider of power to the Southeast -- followed by New Jersey-based natural gas and electric distributor Public Service Enterprise Group Inc. (NYSE:PEG), with average pre-election losses of 2.97% and 2.9%, respectively.

So, why is this sector hit so hard? It's speculative, but some say fears of new and possibly unfavorable energy regulation. This year, for instance, candidate Hillary Clinton has vowed to "generate enough renewable energy to power every home in America, with half a billion solar panels installed by the end of [her] first term." Meanwhile, opponent Donald Trump's vision includes unleashing "America's $50 trillion in untapped shale, oil, and natural gas reserves," and encouraging "the use of natural gas and other American energy resources that will both reduce emissions but also reduce the price of energy."

On the charts, the Utilities SPDR ETF (XLU) has been in a long-term uptrend since March 2009, atop support from its 12-month moving average, and with more pullbacks contained by its 24-month trendline. Since hitting an annual low near $41 in September 2015, the exchange-traded fund (ETF) has muscled roughly 19% higher, and is attempting to find a foothold in the $48-$50 area -- a region that capped XLU's momentum in late 2014 and early 2015, and is roughly double the March 2009 close.

Over the past year, the XLU has outperformed many of its market peers, adding about 11.3%. In 2016, the ETF is up roughly 12.6%. Today, however, XLU is among the worst ETFs, and PPL is in the red after earnings. PEG and SO, meanwhile, have given up most of yesterday's earnings-related gains, with help from a round of price-target cuts from analysts. Whether this downside continues through election day, as it has in the recent past, remains to be seen.

Chart courtesy of iViewMarkets.com

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After the close on Wednesday, fitness tracker producer Fitbit Inc (NYSE:FIT) will report its sixth ever quarterly earnings report since the stock began trading publicly. Heading into the event, traders have taken a distinctly downbeat approach to the stock, which is down 1.7% at $13.03 today. And while history is on the side of the bears, a positive surprise could send quite a few of these pessimists packing.

Technically speaking, FIT has been a long-term disappointment, peaking less than two months after its trading debut, then falling hard. In 2016 alone, the shares have dropped 56% of their value, and in recent weeks FIT has been running into trouble at the previously supportive $14-$14.50 level. On the positive side, the $12.50-$13 region has been supporting the stock since July.

The current sentiment backdrop suggests expectations for the equity are low, to say the least. Options traders have been picking up FIT puts relative to calls at a faster-than-usual clip in recent weeks. In fact, the stock's 10-day put/call volume ratio of 0.77 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks higher than 82% of the past year's readings.

Today FIT options are trading at roughly their normal intraday pace, with calls doubling puts. That doesn't mean bulls are taking control, however. The most active option is the November 14.50 call, where it appears one trader sold to open a block of 1,500 contracts. By selling to open the calls, this speculator is betting on the $14.50 level continuing to serve as a ceiling for FIT in the coming weeks.

Outside of the options pits, short sellers have been piling on. These bearish bets rose by 19.3% during the most recent two-week reporting period, and, with more than 59 million shares shorted, currently represent a record high. In fact, the 44.3% of FIT's total float sold short would take roughly eight days to cover, at the stock's average daily volume.

Analysts have been somewhat kinder. Just over half of those tracking FIT maintain a "buy" or better rating. Plus, the average 12-month price target of $20.88 sits in a region not seen since January. On the other hand, this means the door is wide open for future downgrades and/or price-target cuts.

From a historical perspective, bearish traders seem to be on the right side of things. After all, Fitbit Inc (NYSE:FIT) has made a move to the downside in the session subsequent to reporting earnings in four of the five previous quarters. These haven't been insignificant drops, either; the average one-day post-earnings move in either direction clocks in at 15%. Presently, the options market is pricing in an even wider 18.5% move for Thursday. However, should FIT pull a repeat of the most recent quarter -- when a strong earnings result sent the shares 13.4% higher in a single session -- an unwinding of the existing bearish bets on the stock could create tailwinds.

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