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SE has pulled back to its historically bullish 140-day moving average
The shares of Sea Ltd (NYSE:SE) have taken a tumble on the charts this week. The Singapore-based tech name reported better-than-expected third-quarter revenue on Tuesday, Nov. 16, and raised its annual forecast, however, the company also announced wider-than-expected losses of 83 cents per share. The stock continued to sail lower the following day, after a slew of bear notes, one of which was a downgrade from BofA Global to "neutral" from "buy," though the firm also raised its price target by $5 to $385.
Currently, Sea stock is down 1.7% to trade at $309.10. Nevertheless, this week's negative price action has SE pulling back to its 140-day moving average, after spending a significant period of time above it. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, five similar signals have occurred during the past three years. SE enjoyed a positive one-month return in 80% of those cases, averaging an impressive 16.6% gain. From its current perch, a similar move would put the security back above the $360 level, and closer to its Oct. 19 record high of $372.69.
It's also worth noting that Sea stock's Relative Strength Index (RSI) of 26 is in "oversold" territory. This means a short-term bounce is likely in the cards.
Now looks like a good time to weigh in on SE's next move with options, too. The stock's Schaeffer's Volatility Index (SVI) of 42% stands higher than just 12% of all other readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment.