Why Goodyear Stock Could Keep Rolling Higher

Goodyear Tire & Rubber shares are continuing to roll up the charts, but put buying is still popular

Jun 13, 2017 at 12:00 PM
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Tire manufacturer Goodyear Tire & Rubber (GT) has been a long-term outperformer on the charts. Year-over-year, the shares have added roughly 29.5%, and are back atop familiar support at the $34 level. In fact, GT recently pushed through the closely watched 50-day moving average, and could now be poised to take out its March highs.

 

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There are plenty of skeptics across Wall Street, too, which may explain why there's almost no growth priced into the stock at the moment, illustrated by its price-to-earnings ratio of just 7.49 – one of the lowest in the S&P 500 Index (SPX). Plus, short sellers control 7.3 days' worth of buying power, based on average daily volumes. However, short interest is down 15.1% in the last two reporting periods, and if this trend continues, the stock could keep gaining on the charts.

It's also worth noting that short-term options traders are unusually put-skewed. This is based on Goodyear's Schaeffer's put/call open interest ratio (SOIR) of 1.80, which ranks in the 94th annual percentile. An unwinding of these seemingly bearish positions could help the stock, as well.

Finally, it's a good time to target GT options. This is based on the stock's Schaffer's Volatility Index (SVI) of 23%, which ranks in the low 8th annual percentile, hinting at low volatility expectations for near-term options.

Subscribers to Schaeffer's Weekend Trader Series options recommendation service received this GT commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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