Signal: Retail Stock Could Extend Rebound

Shares of Five Below Inc (NASDAQ:FIVE) are up 5% at $101.88 at last look today, rebounding from last week's 11.1% drop, its worst weekly percentage loss since June. There could be even more room for FIVE to run, if past is precedent, with the retail stock testing a historically bullish trendline.

The stock's recent pullback breached $100, a psychologically-significant pivot point in the last month of the year. Plus, per Schaeffer's Senior Quantitative Analyst Rock White, FIVE is within striking distance of its 80-day moving average after a lengthy period above it (defined by White as 80% of the time over the past two months and 8 of the last 10 trading days). The stock has seen four similar signals over the past three years, after which it was higher one month later three of those times with an average 12.6% gain.

An unwinding of short interest, which represents 7.4% of the stock's available float, could also help upward momentum. A shift in the options pits could provide tailwinds as well, as options traders have been more bearish than usual. This is per FIVE's 10-day put/call volume ratio of 1.79 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks higher than 92% of readings from the past year.