Urban Outfitters (NYSE:URBN) shares are modestly lower, last seen down 0.7% to trade at $72.23 as they extend a pullback from multi-month highs. The recent price action has the stock nearing a historically bullish trendline, however.Â
According to Schaeffer’s Senior Quantitative Analyst Rocky White, URBN is trading within 0.75 times the 50-day moving average’s 20-day average true range (ATR), after spending at least 80% of the previous two weeks and 80% of the prior 42 trading sessions above that trendline.
This setup has appeared 15 times over the last decade, after which the stock was higher one month later 73% of the time, averaging an impressive 5% gain. A comparable rally from current levels would place the retailer at $75.84.
Furthermore, the 7.14 million shares sold short make up 12.62% of URBN’s available float, and it would take short sellers five days to buy back their bearish bets at the stock’s average pace of trading.
It’s also worth noting the stock’s Schaeffer’s Volatility Scorecard (SVS) of 3 out of 100. This means the shares have consistently realized lower volatility than options traders have priced in over the past 12 months. In other words, URBN looks to be an attractive premium-selling candidate.Â
