The shares of Cloudflare Inc (NYSE:NET) are down 1.1% to trade at $29.10 at last check, taking an extended breather from their May 15 all-time high of $30.78. In fact, NET has taken a 3.7% haircut in the last five trading days. The good news is that this pullback has brought the I.T. stock within a historically bullish trendline.
According to data from Schaeffer's Senior Quantitative Analyst Rocky White, NET has pulled back to within one standard deviation of its 40-day moving average. Within the past three years, two similar signals have occurred, after which the equity enjoyed an average 21-day gain of 11.57%, with both of these returns positive.
A similar move would put the stock at around $32.46, a new record high and past the stiff $30 level that has served as a ceiling in the last month. Longer term, NET is up 69% in 2020, and has more than doubled off its Oct. 21 lows of $14.50.
Among analysts, four out of 13 in coverage are still hesitant on Cloudflare, while the 12-month consensus price target of $28.67 is a 0.9% discount to current levels. In other words, a round of overdue price-target hikes could help push NET even higher.
A short squeeze could fuel additional gains. Short interest has risen a whopping 74% in the last reporting period. These 6.35 million shares sold short now account for 8.69% of the stock's available float,, so an unwinding of these bearish bets could also help give the stock a push upwards in the near-term.
With that being said, options could be a good way to go when weighing NET's next move. The stock's Schaeffer's Volatility Index (SVI) of 64% stands higher than just 16% of all other readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment.