Historically Bearish Signal Could Stifle Bank Stock's Rally

Financial services concern U.S. Bancorp (NYSE:USB) is rallying from its July 14 annual low of $43.74, already adding 4.5% month-to-date. USB just came off its second-straight weekly win, and is eyeing its second best monthly performance in a year. However, the security also just moved right into a historically bearish trendline that's stifled similar rallies in the past.

Specifically, U.S. Bancorp stock just came within one standard deviation of its 80-day moving average. According to Schaeffer's Senior Quantitative Analyst Rocky White's latest study, the security has seen five similar signals over the past three years, and was lower one month later 80% of the time, averaging a 5.4% loss for that period. A comparable move from the stock's current perch of $47.86 would place it just above $45.  

The majority of covering analysts are already neutral or outright bearish toward USB, but there remains ample room for optimism to unwind, as five of 17 brokerage firms still rate the security a "buy" or better. Meanwhile, the 12-month consensus price target of $54.94 is a 14.5% premium to the shares' current perch.

Options traders, meanwhile, are already firmly planted in the bearish camp. This is according to U.S. Bancorp stock's 10-day put/call volume ratio of 1.45 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 90% of readings from the past year. In other words, puts are getting picked up at a much quicker-than-usual clip.

Speculating on USB with options could be a prudent play. The stock's Schaeffer's Volatility Index (SVI) of 26% stands in the relatively low 21st percentile of readings from the past year, meaning options traders are still pricing in relatively low volatility expectations for the shares right now.