There are several factors that indicate a rally may come for URBN next month
Urban Outfitters, Inc. (NASDAQ:URBN) is down roughly 7.4% in the last 12 months, with two rally attempts over the last few months cut short just above the $29 area. The shares boast a 14.3% lead already in 2023, but they could surpass more than 52-week highs, if history is any indicator.
More specifically, Urban Outfitters stock just pulled back to within one standard deviation of its 60-day moving average, after a short stint above it. Over the past three years, there have been five prior instances of URBN pulling back to its this trendline, and each instance has resulted in an average one-month return of 13.4% for URBN, per Schaeffer's Senior Quantitative Analyst White. Based on its current perch at $27.26, another move of this magnitude would put Urban Outfitters stock at $30.91 by this time next month -- its highest level since December 2021.
There is reason to believe the stock could have even more room to run. For starters, the equity is ripe for a short squeeze. Short interest fell 8% in the most recent reporting period, yet the shares sold short still represent a hefty 12% of URBN's total available float, and nearly four days' worth of pent-up buying power, at the equity's average daily trading volume.
Short-term options traders are much more put-heavy than usual right now. Urban Outfitters stock sports a Schaeffer's put/call open interest ratio (SOIR) of 4.82, indicating that puts outnumber calls among options expiring within three months. This ratio is in the elevated 98th percentile of its annual range, which means near-term traders are more put-biased than usual. Should the equity embark on another leg higher over the next month, an unwinding of pessimism in the options pits could add fuel to the stock's fire.
Those wanting to bet on a bullish repeat of history for URBN may want to consider a call-buying strategy, considering short-term options on the retail stock are pricing in remarkably low volatility expectations. This is per the security's Schaeffer's Volatility Index (SVI) is 41%, which stands in the low 5th percentile of its annual range.