Footwear name Crocs (CROX), like much of the market, has hit a rough patch during the past month. The security’s July rally lost steam at the $80 region in early August, and the stock has been consolidating below here since. The good news is, CROX has found a floor at the $70 level, keeping it at an impressive 51.5% quarter-to-date lead. Even better, the equity just pulled back to a historically bullish trendline that could provide another layer of support on the charts.
The trendline in question is Crocs stock’s 40-day moving average, which the security just came within one standard deviation of after a lengthy period above the trendline. According to a study conducted by Schaeffer’s Senior Quantitative Analyst Rocky White, there have been seven similar signals in the past three years. One month after 71% of these occurrences, CROX enjoyed a positive return, averaging a 9.2% pop. A similar move from its current perch at $72.22 could put the security just below the $79 level.
A shift in analyst sentiment could put some additional wind in the equity’s sails. Of the seven in coverage, just three say “strong buy,” compared to four “hold” ratings. Meanwhile, short interest is on the rise, up 5.7% in the last reporting period, and it would take a little over two days to buy back these bearish bets, at CROX’s average daily pace of trading.
Now looks like the ideal time to speculate on the equity’s next move with options. Crocs sports a Schaeffer’s Volatility Index (SVI) of 66%, which sits in the 33rd percentile of its annual range. This means options traders are pricing in relatively low volatility expectations right now. Additionally, the stock’s Schaeffer’s Volatility Scorecard (SVS) sits at 96 out of a possible 100, implying that the stock tends to outperform said volatility estimates.