History Says Buy the Dip on This Struggling Semiconductor Stock

Shares of POET Technologies Inc (NASDAQ:POET) are trading 2.8% lower at $8.08 this afternoon, continuing their consolidation around the $8 floor and extending a pullback from mid-May highs. The semiconductor name has joined in the recent sector selloff, already down 20% for the quarter. A light is looming however, as POET approaches a trendline with historically bullish implications.

According to Schaeffer's Senior Quantitative Analyst Rocky White, POET Technologies stock is trading within 0.75 times the 260-day moving average's 20-day average true range (ATR), after spending at least 80% of the previous two weeks and 80% of the prior 42 trading sessions above that trendline.

This setup has appeared seven times over the last decade, after which the stock was higher one month later 86% of the time, averaging an impressive 24.7% gain. A shift of similar magnitude would put the security back above $10. 

There are currently just three brokerages following POET, each sporting a "strong buy" recommendation, leaving plenty of room for more bullish coverage. A short squeeze could help push the stock higher as well, as 15.8% of the the equity's available float is sold short. 

Options are looking more affordable than usual, too. Specifically, POET Technologies stock's Schaeffer’s Volatility Index (SVI) of 111% stands in the 2nd percentile of its annual range.