The equity's 160-day moving average has meant more downside in the past
Chemical product manufacturer Olin Corporation (NYSE:OLN) is pivoting lower today, down 4.1% at $14.48, right on the heels of a six-day win streak, culminating in a one-month high just north of the $15 region, which served as support for OLN prior to its early March bear gap. It's not just the $15 level keeping the shares of Olin at bay either. A historically bearish trendline is looming just overhead which could signal more downside for the stock.
Specifically, Olin just came within one standard deviation of its 160-day moving average after an extended period south of the trendline. According to a study from Schaeffer's Senior Quantitative Analyst Rocky White six similar signals have sounded in the past three years. One month later, just one of these returns were positive, with OLN averaging a 9.56% drop. From its current perch, a similar move would put the security back at $13.10.
An unwinding of optimism in the options pits could create additional pressure on the charts. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), OLN sports a 10-day call/put volume ratio of 7.47. This means over seven long puts have been picked up for every call in the past two weeks. Echoing this, Olin's Schaeffer's put/call open interest ratio of 0.2 sits higher than just 4% of all other readings from the past year, suggesting short-term options players have rarely been more bullish.
While analysts have already taken a cautious stance on OLN, there's still room for downgrades. Of the 12 in coverage, two still say "strong buy," while nine say "hold," and one calls OLN a "strong sell." Plus, the consensus 12-month target price of $15.36 is a 5.6% premium to current levels.