Social Media Stock Ready To Break Out Thanks To Bullish Trendline

Social media stock Pinterest (PINS) just dropped to its lowest level since June after five-straight losses, pulling back to familiar support at the $33 level. Rebounding back into the black today, it looks like the stock could enter recovery mode with help from a historically bullish trendline.

According to Schaeffer’s Senior Quantitative Analyst Rocky White, PINS is now within 0.75 of the 260-day trendline’s 20-day average true range (ATR), after spending at least 80% of the last 10 days and two months above it. Over the past three years, four similar signals have occurred, after which the equity was higher one month later with an average 12.8% gain each time. A move of similar magnitude from the stock’s current perch would place it just shy of $38, a level that rejected the shares earlier this month.

A potential unwinding of pessimism among short-term options traders could be what ultimately helps Pinterest stock topple resistance. The security’s Schaeffer’s put/call open interest ratio (SOIR) of 1.11 ranks in the 96th percentile of readings from the past 12 months, signaling a bearish bias.

Now looks like a great time to weigh in on the stock’s next moves with options. This is per PIN’S Schaeffer’s Volatility Index (SVI) of 39% that sits in the 12th percentile of annual readings, indicating options traders are pricing in low volatility expectations.