Casino concern Eldorado Resorts Inc (NASDAQ:ERI) hit an all-time high in late June, before gapping lower on confirmation the firm is buying Caesars Entertainment (CZR). The stock came close to filling the bear gap earlier this month following a bounce off its 320-day moving average. ERI has once again pulled back to this historically bullish trendline, which could give the equity another run at record highs.
Specifically, the security just came within one standard deviation of its 320-day moving average -- a move that, per data from Schaeffer's Senior Quantitative Analyst Rocky White, has happened two other times in the past few years. The security was higher one month later after both signals, averaging an impressive 10.4% gain. From its current perch at $45.94, a move of similar magnitude would put ERI just below its pre-bear gap levels near $51.
Analysts are bullish on Eldorado Resorts, with all five in coverage calling it a "strong buy." Plus, the consensus 12-month target price of $60.22 is at a roughly 30% premium to current levels, and represents uncharted territory for the equity.
Options traders, meanwhile, have been bracing for another retreat. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ERI's 10-day put/call volume ratio of 5.59 ranks in the 95th annual percentile, meaning puts have been bought to open over calls at an accelerated clip. A shift in sentiment among these traders could create tailwinds for ERI.