A bullish signal suggests further record highs for Texas Instruments stock
The shares of Texas Instruments Incorporated (NASDAQ: TXN) are higher today, most recently up 2.8% to $ 174.14. And while equity has cooled from an all-time high on February 16 of $ 181.80 in the past few weeks, it is still 63% ahead of last year. Better still, on this retreat, semiconductor stocks trading is near a historically bullish trendline, suggesting that TXN could expect further record highs in the not-too-distant future.
Texas Instruments stock was only one standard deviation from its 80-day moving average after spending much time above that trendline. According to Schaeffer’s senior quantitative analyst Rocky White, at least six similar signals have occurred in the past three years. A month later, 83% of the time, the stock returned positive returns, which translates into an average gain of 5.1% for that period. From its current location, a move of similar magnitude would take TXN to a brand new record high of $ 183.02.
The brokerage group is still pessimistic about Texas Instruments stock and leaves plenty of room for upgrades in the future. Of the 22 analysts in the coverage, 13 had a lukewarm “hold” or a poorer rating. The 12 month consensus target of $ 182.15 represents a 4.5% premium over current levels.
Shifting the option pits could keep the wind on the security guard’s back. This corresponds to TXN’s 10-day put / call volume ratio of 1.98 on the International Securities Exchange (ISE), the Cboe Options Exchange (CBOE) and the NASDAQ OMX PHLX (PHLX), which is over 85% of the readings in their annual range. This is reflected in the Schaeffer’s Put / Call Open Interest Ratio (SOIR) of 1.44, which is in the 82nd percentile of the last 12 months. This means that short-term traders have rarely been more biased.
After all, TXN options are pretty cheap right now. The Schaeffer’s Volatility Index (SVI) of 31% is above 11% of all other values of the past year. In other words, option players are currently pricing in lower than usual volatility expectations.