TSCO's Pullback is a Perfect Entry Point for Bulls

The stock has a history of bullish returns in July

Jun 30, 2021 at 2:12 PM

TSCO

The shares of retail name Tractor Supply Company (NASDAQ:TSCO) have just broken out of a falling wedge pattern on the charts, after bouncing off support at the significant 100-day moving average. Now, TSCO is back above its 20-week moving average, which has also been a key trendline and happens to coincide with the +20% year-to-date level.

While the stock had a brief foray below the 175-strike level, which is an area that happens to be the home to peak put interest, it has since surged back above it. It's also worth noting that TSCO has been 100% positive in July for the past 10 years.

tsco jun 30

Meanwhile, options traders have been overwhelmingly bearish as of late. This is per TSCO's 10-day put/call volume ratio of 4.56 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 96% of readings from the past year, showing there is plenty of pessimism to be unwound.

Tailwinds could also come from a shift amongst the brokerage bunch. Of the 20 analysts in coverage, 11 carry a tepid "hold" rating on the equity. Lastly, our recommended call has a leverage ratio of 8.02 and will double in value on a rise of 12.2% in the underlying security.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this TSCO 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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