ZBRA has struggled since hitting repeat record highs just above $615 late last year
In focus on Wall Street this past week has a been a deluge of economic data. But in reality, there was only one reading in focus, a reading that dictated market action both before and after its release. We’re talking about, of course, the consumer price index (CPI) reading, which rose even higher than analyst forecasts. Up 7.2% since last year, the CPI marked its highest level since 1982. Despite the influential data release, stocks settled by Friday morning, giving us the ability to shift back to what we could expect for the remainder of the year’s shortest month.
Before we reach the mid-point of February, I’d like to take a look at one of the best performers of February, from a historical perspective. Schaeffer’s Senior Quantitative Analyst Rocky White has compiled a list of stocks on the S&P 500 Index (SPX) that averaged the highest February returns over the past 10 years.
Of the 25 names on the list, Zebra Technologies (ZBRA) saw the second best one-month return during this 10-year span, averaging a 9.5% pop, with nine of these months positive. A move from its current perch at $438.35, the equity would be back on a road to recovery following the company’s recent post-earnings bear gap.
ZBRA has struggled since hitting repeat record highs just above $615 late last year, and just recently slipped below the 360-day moving average’s long-term support. Should the aforementioned 9.5% return take place, Zebra Technologies stock would be back above $480, and regain the support of the 360-day. In turn, the security would be able to recover some of its 22% year-to-date deficit.
Digging deeper, albeit amid absolute lighter volume, short-term options traders are leaning bearish. Should this pessimism begin to unwind, it could send Zebra Technologies stock higher. Specifically, the security's Schaeffer's put/call open interest ratio (SOIR) of 1.30 stands higher than just 84% of readings from the past 12 months. In other words, short-term options traders have rarely been more put-biased.
Options are also looking affordable at the moment. ZBRA’s Schaeffer's Volatility Index (SVI) of 34% ranks higher than just 32% of reading from the last 12 months. This means options players are pricing in relatively low volatility expectations right now.
Subscribers to Chart of the Week received this commentary on Sunday, February 13.