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Soaring Tech Stock's Bull Signal Has Never Been Wrong

Lillian Currens

Cloud-based software concern Okta Inc (NASDAQ:OKTA) has been on virtually nonstop since its late-November lows. The stock has jumped more than 69% on the year, and just hit an all-time high of $111.94 this past Wednesday, May 22. While the tech stock has pulled back ahead of the firm's first-quarter earnings report next Thursday, May 30, it's sounding a historically bullish signal that could push OKTA toward fresh highs. 

Specifically, the equity just came within one standard deviation of its 30-day moving average, after a lengthy period above the trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, this signal has appeared five times before, resulting in an average one-week gain of 8%, with 100% of the returns positive. From OKTA's current perch at $109.52, a similar move would put the equity back into uncharted territory -- right atop the $118 region. 

OKTA May 23

Taking a look at Okta's earnings history, the security has closed higher after earnings in five of the last eight quarters, including a dramatic 19.5% surge last September. The stock has averaged an 8.2% post-earnings swing during these past seven quarters, regardless of direction, with the options market pricing in an even bigger 10.3% move this time around. 

Despite its recent price performance, some analysts are still sidelining the cloud concern. While 11 analysts think OKTA is a "buy" or better, six say "hold." Plus, the consensus 12-month target price of $92.21 sits at a 16% discount to current levels, leaving the door wide open for a round of bull notes. 

Options traders are still unsure of OKTA, too. The equity sports a 50-day put/call volume ratio of 0.52 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) that sits in the 86th percentile of its annual range. While the ratio shows calls have outnumbered puts on an absolute basis, the elevated ratio shows the rate of put buying relative to call buying has been quicker than usual.