Square Inc (NYSE:SQ) is up 1% today, trading at $75.64. The payments stock has been quiet on the charts lately, shedding 1.5% in the last 30 days. However, amidst this mini pullback, a buying opportunity has emerged, if history is any guide.
Despite boasting a 34% lead in 2019, for the last month Square stock has traded in a tight range between the $74-$78 level. Just below that bottom rung is the shares' 70-day moving average. Over the past three years when Square has come within one standard deviation of this trendline, the equity was up an average of 17.2% a month later and positive every time, per data from Schaeffer's Senior Quantitative Analyst Rocky White. From the stock's current perch, a similar burst would put the security above $88 for the first time since an early October bear gap.
Another vault up the chart could start to sway some of the skeptics in the analyst community. Of the 30 brokerages covering SQ, 15 rate it a "hold" or "strong sell," while its average 12-month price target of $83.33 is a slim 10% premium to its current perch.
Those wanting to bet on Square's next leg higher should know that its Schaeffer's Volatility Index (SVI) of 35% ranks 4 percentage points from a 12-month low. In other words, volatility expectations appear low, suggesting it's an attractive time to buy short-term options premium.
Plus, the security's Schaeffer's Volatility Scorecard (SVS) stands at 90 out of a possible 100. This means SQ has tended to make outsized moves over the last year, compared to what the options market had priced in -- a potential boon to premium buyers.