KTOS has pulled back to its bullish 128-day moving average
Aerospace and defense stock Kratos Defense and Security Solutions Inc (NASDAQ:KTOS) is headed for its eighth loss in the last nine sessions, down 0.7% at $26.97 and falling further from its recent Jan. 22, 18-year high of $35.66. A short-term bounce could soon be in the cards, however, as the equity is flashing a historically bullish signal on the charts.
Per Schaeffer's Senior Quantitative Analyst Rocky White, the stock has pulled back to its ascending 128-day moving average. Specifically, the stock is within 0.75 of the trendline's average true range's (ATR), or 20-day ATR, for the first time in at least eight of the past 10 trading days, after spending at least 75% of the last six months above it.
KTOS has seen five similar signals over the past three years, after which the stock was higher one month later 100% of the time with an average 13.6% pop. From its current perch, a similar move would push the stock back up past the $30 level.
Furthermore, KTOS' 14-day relative strength index (RSI) of 20.5 sits in "oversold" territory, which is typically indicative of a short-term bounce. Despite being down 19.3% since the start of the month, the shares are still outperforming with a roughly 30% year-over-year gain.