Carvana Stock Looks Ripe For Another Rebound

Carvana Co (NYSE:CVNA) is trading 2.3% higher at $324.67 this afternoon, attempting to extend a rebound off the $280 level, a site that captured its June pullback as well. Just last month we suspected the 126-day moving average to be a level of support for the shares given its historic significance, while this time CVNA is nearing a new bullish trendline. Following last month's signal, the stock popped as high as $372 -- just three days later.

Per Schaeffer's Senior Quantitative Analyst Rocky White, the stock is now within 0.75 of the 200-day moving average's 20-day average true range (ATR) after remaining above it 80% of the time in the last 10 trading sessions and 80% of the time in the last two months. 

This signal has occurred eight other times in the past 10 years, after which the stock was higher one month later 86% of the time with an average 6.7% gain. A move of similar magnitude from Carvana stock's current perch would put the shares near $346.42.

Puts have been more popular than usual of late, leaving plenty of room for bulls, should this pessimistic sentiment unwind. CVNA's 10-day put/call volume ratio of 1.94 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks higher than 90% of readings from the past year.

Options are cheap, too. Carvana stock's Schaeffer's Volatility Index (SVI) of 67% stands higher than just 23% of all other readings from the past year, implying that near-term option traders are pricing in relatively low volatility expectations.