Semiconductor stock Arm Holdings PLC (NASDAQ:ARM) has seen choppy price action since its late-July bear gap, most recently pulling back to $140. The stock is still comfortably removed from its April lows, however, and sports a 13.7% year-to-date lead. Plus, a historically bullish signal flashing could indicate a short-term bounce is coming.
Per Schaeffer's Senior Quantitative Analyst Rocky White, ARM is within 0.75 of the 200-day moving average's 20-day average true range (ATR), after spending at least 80% of the last 10 days and 80% of the last two months above it. This has happened four other times over the past three years, after which the equity was higher one month later three of those times, with an average 9.8% gain. A move of similar magnitude from the security's current perch at $140.42 would have ARM reclaiming its year-over-year breakeven level.
The 320-day trendline sits below as well, and we could be seeing the emergence of support at $140. There is plenty of short squeeze potential too. Short interest represents 11.1% of the stock's available float, or three days' worth of pent-up buying power.
