Energy drink maven Celsius Holdings (CELH) experienced its own caffeine crash this month. The stock suffered a 24.8% post-earnings bear gap on Nov. 6 — even after the company’s third-quarter earnings and revenue exceeded estimates — and proceeded to move lower from there in the subsequent days. What weighed on the energy drink company was worries over “a channel change involving its newly acquired Alani Nu brand” disrupting near-term shares. It was the stock’s worst single-session drop since March 2021.
Subsequent pump fake rallies have likely frustrated investors who thought that was time to ‘buy the dip.’ With the macro headwinds classified as short-term, the time may finally be now; this extended slide has CELH testing a historically bullish trendline.
Per Schaeffer’s Senior Quantitative Analyst Rocky White, Celsius stock is within striking distance of its 320-day moving average, after trading above the trendline 80% of the time over the past two months and closing north of the trendline in eight of the last 10 sessions.
According to White’s study, eight similar signals occurred in the past three years, and the stock was higher one month later 71% of the time, averaging a 6.8% gain. A similar move from its current perch would put CELH back near those post-earnings lows from early November. There’s an additional leg of support to monitor at the round-number, psychologically-significant $40 level.
Keep an eye on the stock’s 14-Day Relative Strength Index (RSI) as well, firmly in “oversold” territory at 20. Short interest is another storyline to monitor. Short interest fell 16.2% in the two most recent reporting periods, yet the 14.92 million shares sold short accounts for 9.1% of Celsius’ total available float.
An unwinding of pessimism in the options pits could add more tailwinds. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security’s 10-day put/call volume ratio of 1.72 sits in the highest percentile of its annual range. Options are a popular move amid a post-earnings volatility crush. This is per CELH’s Schaeffer’s Volatility Index (SVI) of 57% that ranks in 26th percentile of its annual range.
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