Video Game Giant Could Resume Pullback Says Bear Signal

AI-focused Unity Software Inc (NYSE:U) is trading 1.9% higher at $27.26 this afternoon, headed for its third-straight daily win. U is down 39% since the start of the year, and another pullback could be on the horizon as a U nears a historically bearish trendline on the charts.

According to Schaeffer's Senior Quantitative Analyst Rocky White, shares are within 0.75 of the 100-day moving average's 100-day average true range (ATR), after remaining below it 80% of the time in the past two weeks and in 80% of the last 42 trading sessions.

This signal has occurred four times in the last 10 years, after which U was lower one month later 67% of the time, averaging a 10.1% loss. From its current perch, a pullback of this weight would put the tech stock back below $25.

Currently, 15 of the 23 brokerages in coverage sport a "buy" or "strong buy" recommendation. This leaves ample room for more bears to move in, should this bullish attention begin to unwind.

Options look like an attractive route when weighing on the stock's next moves, per its Schaeffer's Volatility Index (SVI) of 70% that sits higher than just 16% of all other readings from the past year. In other words, near-term option traders are pricing in relatively low volatility expectations.

Unity Software stock's Schaeffer's Volatility Scorecard (SVS) comes in at 86 out of 100. In other words, the security has consistently realized higher volatility than its options have priced in over the past 12 months.