Options traders may want to consider buying calls on PYPL and NAVI
Financial stocks are in the crosshairs today, amid rumblings that President Donald Trump could roll back regulations within the industry -- including Dodd-Frank. Shares of
Paypal Holdings Inc (NASDAQ:PYPL) and
Navient Corp (NASDAQ:NAVI) are benefiting, too, both solidly higher at last check. Plus, based on a closer look at the stocks' respective charts, the duo could be on the verge of a near-term breakout.
Currently, PYPL is up 0.7% at $39.86. What's more, the financial shares are flirting with their 200-day moving average, which has served as a bullish signal in the past. In the last three years, the stock has touched this trendline four times, and gained ground in the ensuing month 100% of the time. On average, PYPL's post-signal 21-day return is a gaudy 4.8%.
It's a similar story for NAVI. The shares recently touched their 160-day moving average, and following the two prior occurrences, they soared an average of almost 21% in the ensuing 21 sessions. It looks like the bounce is already beginning, as the stock is currently up 1.9% at $15.39.
Two other factors could bolster both PYPL and NAVI
shares. For one, each stock's 14-day Relative Strength Index (RSI) settled at 34 last night -- just a chip-shot from "oversold" territory, suggesting today's gains may have been in the cards. For another, PYPL and NAVI have elevated short-interest ratios (SIR) of 6.20 and 6.60, respectively. In other words, there's plenty of pent-up buying power on the financial stocks, which could lead to a powerful short-squeeze rally.
Technically speaking, Paypal Holdings Inc (NASDAQ:PYPL) and Navient Corp (NASDAQ:NAVI) have cooled off lately, as evidenced by their low RSI readings and trendline pullbacks. Longer term, NAVI has been the stronger of the two, soaring 61.3% year-over-year, while PYPL has tacked on a more modest 7.2%.
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