Darden Restaurants Inc (NYSE:DRI) stock was last seen up 0.9% to trade at $187.70, bouncing off a pullback to its lowest level since January after it hit a March 3, record high of $203.12. In addition to sporting a nine-month lead of 22.2%, the shares are now within striking distance of a trendline that has historically produced bullish returns.
According to Schaeffer’s Senior Quantitative Analyst Rocky White, DRI is trading within one standard deviation of its 80-day moving average, a move that has produced gains in the past. This comes after a prolonged period above this trendline (defined by White as 80% of the time in the past two months and eight of the last 10 trading days).
A similar move occurred six times in the past three years, after which DRI was higher a month later 67% of the time, averaging a 4.1% gain. From its current perch, this would place the stock above $195, closer to its all-time peak.
An unwinding of pessimism in the options pits could fuel additional gains. Over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity’s 10-day call/put volume ratio of 16.87 sits higher than all annuals readings.
