The S&P 500 Index (SPX) rattled investors last Monday, April 2, by closing below its 200-day moving average for the first time in nearly two years. Lost in the sea of headlines about this benchmark trendline breach was the fact that the S&P MidCap 400 Index (MID) one-upped its bigger-cap counterpart by battling back to close the session above its own 200-day, despite the index's intraday dip beneath this closely followed moving average.

Perhaps the lack of interest in this technical feat is due to the fact that MID has kept in much closer contact with its 200-day moving average than the S&P 500 has in recent years -- including a close below this trendline as recently as Feb. 8, and a particularly dicey three-week stretch back in August and September where MID's 200-day briefly threatened to emerge as resistance. So in that regard, it's somewhat unremarkable that this trendline was touched at all by the mid-cap tracker, and Monday's successful close back above the 200-day would seem to solidify the "non-event" status of this occurrence.

But with big-cap, mid-cap, and small-cap indexes alike continuing to chop around their year-to-date breakeven levels, traders may find it informative to consider MID's historical tendencies following tests of its 200-day -- particularly given the rich sample size generated in recent years, relative to the broader S&P 500.

Looking back to the start of the current bull market, there have been 10 occasions where MID has traded below its 200-day moving average on an intraday basis after spending at least a month above it (with the latest signal occurring on April 2, as noted above). One month after a signal, MID's performance doesn't deviate too greatly from its "anytime" one-month performance, though the standard deviation of returns is somewhat elevated at 5.30%, versus 4.27% typically -- suggesting slightly higher-than-normal volatility immediately after a signal.

But looking out over the next three-month, six-month, and 12-month periods after an intraday breach of MID's 200-day trendline, the index outperforms its "anytime" average returns over every time frame. Perhaps most notable is the fact that MID has been higher 12 months after a signal 100% of the time, compared to 84% positive "anytime" returns.

That said, it's equally notable that the standard deviation of returns rises to 15.49% one year after a signal, which significantly outstrips the typical 11.19% over this time frame. So while the longer-term trend may continue to the upside for MID in the months and quarters ahead, traders should be aware that those gains are likely to arrive alongside heightened overall volatility.

Subscribers to Bernie Schaeffer's Chart of the Week received this commentary on Sunday, April 8.

Alibaba Group Holding Ltd (NYSE:BABA) is up 2.6% to trade at $174.35 this morning, after The Wall Street Journal (subscription required) reported that founder Jack Ma's Ant Financial is planning to raise $9 billion in its latest round of private funding. Back in February, Alibaba announced plans to take a 33% stake in Ant Financial.

The news has Alibaba stock trading back above its year-to-date breakeven level, as well as back near the 200-day moving average, a trendline that had served as support but was breached last week amid the broad-market pullback. Despite the equity's struggles lately, it's still up almost 58% over the past year.

A short squeeze could send BABA stock higher. Short interest fell by 1.4% in the last two reporting periods, yet the 122.61 million shares sold still represents 10% of the stock's total available float. At BABA's average daily trading volume, this is nearly seven days of pent-up buying demand. 

Although calls have outnumbered puts on an absolute basis in recent weeks, puts have become unusually popular. BABA sports a 10-day put/call volume ratio of 0.67 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) -- in the 100th percentile of its annual range, meaning puts have been bought to open at a much faster-than-usual rate relative to calls.

Finally, Alibaba stock sports a Schaeffer's Volatility Scorecard (SVS) of 91 out of 100. This indicates that the e-commerce name has handily rewarded premium buyers over the past year, often exceeding options traders' volatility expectations.

Shares of electrical concern Energous Corp (NASDAQ:WATT) are soaring after the Federal Communications Commission (FCC) certified the company's WattUp technology after yesterday's close. In response, WATT stock was up a healthy 14.5% at $19.07, at last check.

Energous stock saw a massive bull gap in late December, thanks to a similar FCC nod, touching a record high of $33.50 on Dec. 28. However, WATT subsequently lost steam and pulled back to its 160-day moving average, due to broad-market headwinds and a Citron Research tweet. Today, the equity is set to close back above its 20-day moving average for the first time in a month.

Short interest on WATT rose 4.1% over the past two reporting periods, and now accounts for a massive 39% of the stock's total available float. At Energous stock's average daily trading volume, it would take over six sessions for the shorts to cover their bearish bets -- plenty of fuel for a short squeeze.

Options traders have been more bearish than usual towards WATT in recent weeks. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows Energous stock with a 10-day put/call volume ratio of 0.48, ranking in the 78th percentile of its annual range. Although the ratio indicates that calls still outnumber puts on an absolute basis, the elevated percentile implies that buyers have shown a greater-than-usual preference for puts over calls in the past two weeks.

Shares of Netflix, Inc. (NASDAQ:NFLX) have jumped 2.2% out of the gate to trade at $296.24, after several analysts issued bull notes on the FAANG stock. While Evercore ISI boosted its NFLX price target to $250 from $220, Raymond James lifted its target price to $330 from $290 -- in line with the security's March 12 record high of $333.98.

The most optimistic outlook came from Morgan Stanley, though. The brokerage firm raised its price target for Netflix by $75 to $350 -- saying it expects first-quarter subscriber growth to be higher than anticipated, and that the streaming service is in the early stages of global growth.

Today's pop helps extend a recent bounce in the $275-$280 region, which is home to a 38.2% Fibonacci retracement of the stock's rally from its early December lows to its mid-March peak, as well as its rising 60-day moving average. However, the round $300 level has served as a ceiling over the past few days. This coincides with peak put and call open interest in the standard April series, suggesting NFLX could get pinned to this strike as front-month options expiration approaches over the next two weeks.

The April 300 call has a roughly 4,700-contract lead over the put, mirroring a call-skewed trend seen at the major options exchanges. Drilling down on the past two weeks' worth of options activity shows speculative players at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open more calls than puts, based on Netflix's 10-day call/put volume ratio of 1.71, in the 93rd percentile of its annual range.

And amid recent tech sector headwinds, NFLX call options are pricing in remarkably low volatility expectations compared to their put counterparts. The stock's 30-day implied volatility skew of 10.2% ranks in the 89th annual percentile.

Apparel stock Ralph Lauren Corp (NYSE:RL) last week bounced from the 60-day moving average, a trendline that's been very supportive since early February. Considering this, and the fact that the shares have been in a strong uptrend since last May, it appears to be a good time to bet on RL adding to its more than 38% year-over-year advance.

Even after the stock's impressive multi-month rally, short interest remains very high on Ralph Lauren. However, short interest fell more than 11% in the last two reporting periods, and 12% of the float is still sold short. This suggests there's plenty of room for this short-covering trend to continue, which would help the equity on the charts.

The door is also wide open for future bull notes from analysts. As it stands now, there are 15 brokerage firms in coverage on RL, and just three of them see it as a "buy," compared to four "sell" or "strong sell" ratings.

As for options data, the security has a Schaeffer's Volatility Index (SVI) of 27%, which ranks below 86% of readings from the past year -- hinting at low volatility expectations at the moment for near-term options.

Shares of Nvidia Corporation (NASDAQ:NVDA) are up 5.6% to trade at $227.36, after Morgan Stanley upgraded the chip stock to "overweight" from "equal weight. The brokerage firm -- which also chimed in on Netflix (NFLX) -- said the stock's recent pullback could be a buying opportunity and that gaming growth will likely offset declining cryptocurrency revenue. This bullish bias is being seen in the options pits, too, with calls crossing at an accelerated clip.

By the numbers, roughly 44,250 NVDA call options have changed hands today, roughly 1.7 times the expected intraday pace. For the sake of comparison, around 31,000 puts options have traded so far.

While it's not entirely clear how traders are positioning themselves at the June 150 put -- Nvidia's most active option -- it's likely new positions are being purchased at the weekly 4/13 225-, 230-, and 235-strike calls, which have all seen notable trading so far. If this is the case, the goal is for the tech shares to extend today's upside through expiration at this Friday's close.

More broadly, options traders have been buying to open puts relative to calls at a faster-than-usual clip. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 0.86 ranks in the 98th annual percentile.

In fact, it looks like a significant amount of this activity has centered at the June 150 put. Specifically, Trade-Alert pegs notable buy-to-open activity here last Thursday, April 5, when NVDA closed the day down 2.2%, after Citron Research said in a tweet that it's shorting the stock at $200. Given the deep out-of-the-money status of the put, it's possible shareholders were initiating options hedges against a steeper sell-off.

Looking at the charts, the last time NVDA stock traded south of $150 was last July, with the shares up nearly 133% year-over-year. And while the tech name has been pressured lately by sector headwinds, as well as the suspension of the company's autonomous vehicle tests following Uber's fatal self-driving car accident, the equity's 120-day moving average has emerged as support -- just as it did last April.

Chocolate king Hershey Co (NYSE:HSY) was downgraded to "sell" from "neutral" by UBS analyst Steven Strycula, who also dropped his price target to $90 from $106. Citing an internal report, Strycula says consumers have been buying chocolate less frequently and have shifted to healthier snacks. Strycula also noted the big year-to-date rise in cocoa prices, which could hurt Hershey's gross margin estimates for the second half of 2018 and into 2019. He believes rivals like Mars, Nutella parent Ferrero, and Oreo maker Mondelez (MDLZ) could all steal market share.

HSY was last seen trading down 1.9% in pre-market action. It's already been a rough year for HSY stock, with the shares falling 12.5% year-to-date to close last night at $99.36. Most of these losses came from an early February bear gap, after the company reported lower-than-expected fourth-quarter earnings. While the security recently bounced from the $95-$96 area that also acted as strong support back in late 2016, its 50-day moving average has kept a tight lid on the shares in recent sessions.

There are 13 brokerage firms in total tracking the equity, and just three have anything better than a "hold" or "sell" rating. However, HSY's average 12-month price target stands up at $108.06, a nearly 9% premium to current levels and just below the levels seen right before that February bear gap. There appears to be a chance for more price-target cuts to come through if the shares continue to struggle.

Also, short interest has been picking up since bottoming in July, including a 13.9% rise in the last two reporting periods. But short interest still represents just 2.6% of Hershey's total float, suggesting there's room for more bears to pile on, which would act as yet another headwind for the stock.

After Monday’s stock sell-off, the S&P 500 Index (SPX) closed below its 200-day moving average for the first time since June 2016. Going all the way back to 1929, it’s just the 19th time the index spent over a year above that trendline. It’s a widely followed moving average, so bulls will tout the dip as a buying opportunity, while bears will say it's major support being broken. This week, I’ll see how the SPX has performed after breaking its 200-day moving average after such a long time spent above it.

SPX After Snapping Streak Above 200-Day

This table shows SPX returns after its 200-day moving average was breached for the first time in at least a year. When you summarize the returns after these signals going back to 1929, they're not too impressive going forward. The average SPX returns underperform the typical returns at each time frame, as you can see by comparing the first table below to the anytime returns since 1929. However, two of those occurrences happened during the Great Depression, where losses were large following the 200-day breach. Simply getting rid of those two returns sends the average S&P return over the next year above 10%.

Last 10 Breaks Have Preceded Big Gains

This table shows the last 10 times the 200-day moving average was breached by the S&P 500 after at least a year above it. The last time it occurred was 2014. Stocks immediately bounced back after that instance, with the SPX gaining more than 8% over the next month, and more than 12% over the next six months. Hopefully the bulls step up similarly after this week's breach. In fact, the last seven times this happened, the index was positive over the next six months and one year.

The more recent breaks of the 200-day moving average have had bullish implications going forward for stocks. The average S&P return after these signals significantly beats typical index returns since 1963 (the year of the first of the last 10 signals). An optimistic perspective would be that technical analysis is more prominent in more recent times, because of computers and accessibility.

The recent global trade tensions have weighed on China-based Baidu Inc (NASDAQ:BIDU), with the shares falling from around $270 to their current perch of $226.56 in less than a month. This pullback could be a buying opportunity, however, based on technical data -- and past BIDU performances. Take a look at the chart below.

As you can see, the shares have pulled back near their 320-day moving average, emulating price action seen back in early February. Data from Schaeffer's Senior Quantitative Analyst Rocky White says similar pullbacks to the 320-day moving average over the past three years have yielded a one-month rise of 7%, on average, with a 67% win rate. A similar move this time around would put the security just above $241.

Baidu's Fibonacci retracements are also worth mentioning. The $230-$233 is especially noteworthy, home to a 61.8% Fibonacci retracement of the equity's run from its July bull gap to the October record high near $275. You can see how the shares snapped back to this region after the early February retreat, and how it's acted as both technical support and resistance in recent months.

BIDU has been a good performer for premium buyers during the past year, based on its Schaeffer's Volatility Scorecard (SVS) of 85. In short, this shows it has a tendency to make bigger moves than the options market has predicted. Even so, open interest is low, ranking in just the 35th annual percentile with 240,308 contracts open.

New U.S. sanctions against Russia are sinking the VanEck Vectors Russia ETF (RSX), along with several stocks with Russian ties, including internet issue and Uber partner Yandex NV (NASDAQ:YNDX). In addition, the sanctions froze the U.S. assets of Russian aluminum company Rusal, lifting shares of American aluminum producers like Alcoa Corp (NYSE:AA). Against this backdrop, RSX, YNDX, and AA stocks are seeing unusual options activity today.

RSX Put Volume Hits New High

Shares of the VanEck Vectors Russia exchange-traded fund (ETF) were last seen 10% lower at $20.14, set for their worst day since December 2014. Further, RSX is set to end beneath its 200-day moving average for only the second time since August. The fund is now on the short-sale restricted (SSR) list.

As such, RSX puts are flying off the shelves at 16 times the average intraday clip, with more than 44,000 exchanged. That's already surpassed the ETF's previous annual high of 25,772 puts traded on Jan. 18, and is more than four times the number of RSX calls exchanged.

The April 20 put is easily the most active, accounting for more than 15,000 contracts. Speculators buying the puts to open expect RSX shares to move south of $20 by the close on Friday, April 20, when the front-month options expire. The fund hasn't ended beneath that level since August.

Today's affinity for puts merely echoes the growing trend we've seen on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), where RSX sports a 10-day put/call volume ratio of 1.05. This ratio registers in the 66th percentile of its annual range, suggesting options buyers have been picking up RSX puts over calls at a faster-than-usual clip during the past two weeks.

YNDX Option Buyers Bet on a Bounce

Yandex shares are down 10.4% at $35.29 -- also set for their worst day since Dec. 8, 2014. The equity is set to close south of its 120-day trendline for only the second time in over a year, and is also on the SSR list today.

Unlike RSX, options traders today are targeting YNDX calls. In fact, call volume is running at 23 times the average intraday clip, with 53,000 exchanged thus far. That's already above the security's Feb. 2 annual high of more than 31,200 calls traded, and is about 10 times the number of YNDX puts exchanged.

The May 36 call is most popular, accounting for more than 21,000 contracts. According to Trade-Alert, much of the activity is of the buy-to-open variety. By purchasing the calls to open, the buyers expect Yandex stock to rebound north of $36 before May options expire.

Still, YNDX is no stranger to call buyers. On the ISE, CBOE, and PHLX, the equity's 10-day call/put volume ratio rests at a lofty 26.05 -- in the 80th percentile of its annual range. In other words, even before today, options buyers have preferred YNDX calls over puts by a huge margin.

Alcoa Eyes Best Day in a Year

Finally, Alcoa is reaping the benefits of the Russian aluminum sanctions, with the shares last seen 7.2% higher at $51.48. The equity is now pacing for its first close above its 60-day moving average since early February, and its best day since April 2017. Prior to today, AA shares were bouncing along support in the $44 region.

Alcoa options are crossing the tape at three times the average afternoon pace, though calls outnumber puts roughly 3-to-1. Speculators are seemingly placing short-term bullish bets, with most of the action taking place at the weekly 4/13 50-strike call. By purchasing the calls to open, the buyers expect AA stock to extend its trek above $50 through the end of the week.

Again, though, it's more of the same for AA options buyers, which have preferred calls over puts by a bigger-than-usual margin in the past two weeks. The aluminum stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 7.34 is higher than 93% of all other readings from the past 12 months.

Alphabet Inc (NASDAQ:GOOGL) received some bullish analyst attention over the weekend, with Barron's calling the Google parent (subscription required) a "bargain in big tech," and noting that traders aren't pricing in the company's upbeat growth outlook on concern's Facebook's data scandal could result in increased government scrutiny. The expectations for stricter regulation is also one of the reasons given by fund managers who have recently reduced their exposure to troubled FANG stocks.

At last check, GOOGL stock was up 2.8% to trade at $1,037.25, climbing back above its 200-day moving average. After catching the stock's swift retreat from its Jan. 29 record high, this trendline has more recently served as a magnet since late March. However, the security is still trading 1.5% below its year-to-date breakeven level.

Despite the stock's choppy trading in recent months, analysts remain in Alphabet's corner. Of the 31 brokerages covering GOOGL, 26 rate it a "strong buy" or "buy." Furthermore, the stock's average 12-month price target of $1,278.81 represents a 23% premium to the stock's current perch.   

Short sellers, meanwhile, have been reducing their exposure to Alphabet during the FAANG stock's technical troubles. Short interest fell 10.2% in the two most recent reporting periods to 3.4 million shares. This represents just 0.6% of GOOGL's total available float, or 1.7 times the stock's average daily trading volume.

The U.S. stock market has rebounded sharply from last Friday's sell-off, as tariff tensions between Washington and Beijing once again recede. Among individual stocks making big moves are skin specialist Menlo Therapeutics Inc (NASDAQ:MNLO), Nuplazid parent ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), and gene therapy name Regenxbio Inc (NASDAQ:RGNX). Here's a quick look at what's moving the three drug stocks.

Menlo Therapeutics Itch Treatment Fails Mid-Stage Study

Menlo Therapeutics shares have plummeted 73.7% to trade at $9.27, a record low, after the drugmaker said its itch and cough treatment, Serlopitant, did not meet its goals in a mid-stage study. What's more, MNLO was downgraded to "hold" from "buy" at Jefferies, which also slashed its price target by $21 to $20, citing "greater level of risk for remaining programs."

MNLO stock first began trading publicly on Jan. 25, and settled the session at $28.71 -- well above its $17 initial public offering (IPO). Since then, the shares have stuck to a $30-$40 trading range, closing last week right in the middle at $35.22. Analysts were upbeat, too. Heading into today, all four brokerage firms maintained a "strong buy," and the average 12-month price target was $35.50. This puts the sinking security at risk for more bearish brokerage notes, should this sell-off continue.

ACADIA Pharmaceuticals Stock Hits Five-Year Low

A scathing CNN report detailing the number of deaths that have been associated with ACADIA Pharmaceuticals' Parkinson's disease drug, Nuplazid, which is used to treat patients suffering from psychosis. In reaction, ACAD stock bottomed at nearly five-year low of $15.74 earlier, and was last seen down 26.2% to trade at $15.90.

The shares have been stair-stepping lower since topping out at an annual high of $41.20 last October. And while a late-February bear gap had the shares slicing through long-term support in the $26-$27 region, the recent floor near $21 was quickly broken in today's slide, with ACAD stock now down 47% on the year.

ACADIA Pharmaceuticals seems overdue for a round of bearish brokerage notes, too, which could send the shares even lower. All six covering analysts maintain a "strong buy" rating, and the consensus 12-month price target of $50.57 more than triples the stock's current price.

Regenxbio Shares Pop on $180 Million AveXis Payment

Regenxbio shares have shot up 17.1% to trade at $31.85, on news the $8.7 billion buyout of AveXis by Novartis will result in a $180 million licensing agreement payment to RGNX. Adding to the bullish backdrop is Mizuho's upwardly revised price target to $29 from $28 for the stock, though this still sits below the current trading price, as well as the average 12-month price target of $43.57.

It's been a choppy year of trading for RGNX, though the equity has added 89% in the past 12 months, thanks to several sharp bounces off its 200-day moving average. Short sellers are likely feeling the heat, too, which could be driving some of today's upside. More than two million RGNX shares are sold short, accounting for 8.5% of the stock's available float, or 4.2 times its average daily pace of trading.