Aerospace Giant Lockheed Martin Corp Sees Buying Opportunity Amid Downtrend
The aerospace and defense sector has been experiencing a downturn, and Lockheed Martin Corp (NYSE:LMT) is no exception. After missing revenue expectations in late October, the company’s shares have been on a downward spiral, with losses piling up. Currently, shares are trading 0.8% lower at $485.15, marking their 15th loss in 20 sessions.
Historical Trends Suggest a Rebound
Despite the recent decline, historical trends suggest that this drawdown presents a unique buying opportunity. According to Schaeffer’s Senior Quantitative Analyst Rocky White, Lockheed Martin’s stock is nearing its 320-day moving average, a trendline it has traded above 80% of the time over the past two months. In fact, the stock has closed north of the trendline in eight of the last 10 sessions.
Past Performance Indicates Future Gains
White’s study reveals that four similar signals have occurred in the past three years, and in each instance, Lockheed Martin’s stock has risen in the following month, averaging an 8.2% gain over 21 days. If history repeats itself, the stock could potentially fill its 8.4% 30-day deficit.
Technical Indicators Point to Oversold Territory
The shares’ 14-day relative strength index (RSI) of 34.1 is hovering near “oversold” territory, further supporting the case for a rebound. Additionally, an unwinding of pessimism in the options pits could provide an added boost.
Options Market Sentiment Suggests a Shift
At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Lockheed Martin’s 50-day put/call volume ratio of 0.50 stands higher than 97% of readings from the past 12 months. This suggests that investors are overly bearish, paving the way for a potential shift in sentiment.
Volatility Expectations Favor Premium Players
Lockheed Martin’s Schaeffer’s Volatility Scorecard (SVS) of 95 out of 100 indicates that the stock tends to outperform volatility expectations over the past year. This is a boon for premium players looking to speculate on the potential positive price action.
Leave a Reply