Array Technologies is flashing a historically bullish signal
Array Technologies Inc (NASDAQ:ARRY) is pulling back from multi-month highs after another runup to its 2022 peak of $24, touched on Aug. 11. While ARRY this level remains elusive, several levels of support are in place, including the equity's 160-day moving average, which launched the shares back up the charts in late-October. Plus, historical evidence suggests that ARRY could topple this level soon.
This is because these recent highs come amid historically low implied volatility (IV) for the stock -- a bullish combination in the past. Per data from Schaeffer's Senior Quantitative Analyst Rocky White, there have been four similar times during the past three years when the equity was within 2% of a 52-week high while its Schaeffer's Volatility Index (SVI) sat in the 20th annual percentile of of lower. This is true of Array Technologies stock, which also sports an SVI of 75% that stands higher than just 15% of readings from the past year.
Digging deeper, ARRY has averaged an 18.4% one-month return after these signals, with 50% of these returns being positive. From where it currently sits, a move of similar magnitude would put the security well above the $24 mark at $26.10, marking a fresh annual high.
Short sellers are hitting the exits, with short interest down 6.8% in the last reporting period. However, there's still room for a further unwinding of pessimism, as the 19.20 million shares sold short makes up almost 13% of the stock's available float, or nearly a week's worth of pent-up buying power.
The stock could benefit from a shift in the options pits, too. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security sports a 50-day put/call volume ratio that stands higher than all but 2% of readings from the past year. In other words, puts are being picked up at a much quicker-than-usual clip.