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Software Stock Could Surge Into February

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Patrick Martin
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Atlassian Corporation PLC (NASDAQ:TEAM) started the new year off on the right foot, nabbing a record high of $100 on Jan. 18 in the wake of an upbeat quarterly report. While a pullback has since ensued, if past is precedent, the collaborative software stock could be due to revisit those record highs in the coming weeks.

Specifically, TEAM recently came within one standard deviation of its 40-day moving average, following a lengthy stretch north of this trendline. Over the past few years, per Schaeffer's Senior Quantitative Analyst Rocky White, the stock was higher three weeks later 100% of the time, with an average gain of 7.41%, after similar pullbacks.

At last check, Atlassian stock was up 1% to trade at $92.30. A 7.4% pop from its current perch would put the equity right near the $100 mark. Another run at record highs could be fueled by more bull notes, too. since half of the 16 brokerages in coverage rate TEAM a "hold" or worse.

Daily Stock Chart TEAM
Daily Stock Chart TEAM

As for options activity, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows TEAM stock's 10-day put/call volume ratio of 1.10 ranking in the 75th percentile of its annual range. The high percentile indicates a much healthier-than-usual appetite for long puts over calls in the past two weeks.

Meanwhile, data does suggest it would be a good time to speculate on the security with options, based on the Schaeffer's Volatility Index (SVI) of 43%, which ranks in the 23rd annual percentile, hinting at low volatility expectations at the moment.