United Airlines just pulled back to a historically bullish signal on the charts
United Airlines Holdings Inc (NASDAQ:UAL) has seen an impressive bounce off its late-January lows. The stock is eyeing its third consecutive win, and just successfully closed last month's bear gap. News that the company agreed to buy Westwind School of Aeronautics, making it the first and only major U.S. carrier to own and operate a flight training academy for aspiring pilots, is also pushing UAL higher, and at last check the equity is up 2.9% to trade at $81.15.
Even more upside could be on the way, according to data from Schaeffer's Senior Quantitative Analyst Rocky White, which shows UAL coming within one standard deviation of its 160-week moving average -- a historically bullish signal on the charts. In fact, this data shows that the security has experienced five similar pull backs within the past 15 years. Three month after these signals, the flight concern was higher 80% of the time, averaging a 10.38% pop. A similar move, from UAL's current perch, would put the equity back near the $90 level.
Today's news has call volume running slightly hotter than usual. So far, 19,000 calls have crossed the tape, compared to just 8,912 puts. A large portion of this activity is surrounding the March 87.50 call, with positions being sold to open at the weekly 2/7 83-strike call as well.
This tendency towards bullish bets is nothing new for UAL, with 42,000 calls exchanged during the past 10 days, verus 29,846 puts. Bears have begun to jump ship elsewhere, too, with short interest down 11.3% in the last reporting period. Despite this, it would still take almost a week to cover these pessimistic positions at UAL's average pace of trading, leaving plenty of room for a short squeeze to push the equity higher.
Sentiment among the brokerage bunch has also been overwhelmingly bullish, with nine of the 12 in coverage calling UAL a "strong buy." Plus the consensus 12-month target price of $109.88 is a lofty 35.2% premium to current levels.