Wendy's Stock is Flashing Multiple Bearish Signals

Fast-food giant Wendy's (NASDAQ:WEN) was last seen down 1% at $8.53, extending its pullback from $9. The shares are just above year-to-date breakeven levels and despite coming off a 12.4% weekly win, Wendy's stock is flashing a bearish sentiment signal.

According to Schaeffer's Senior Quantitative Analyst Rocky White, WEN is trading within 0.75 times the 320-day moving averages' 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 five other times over the last decade, after which the stock was higher one month later only 40% of the time, averaging a 5.5% loss. 

Short sellers are firmly in control as well, with 33.96% of the stock's available float sold short. There's a similar sentiment among analysts, with 17 of the 22 maintaining "hold" or worse ratings. 

In the options pits, WEN sports a 10-day put/call volume ratio of 1.13 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 87% of all other readings from the past year, hinting at strong bearish sentiment from long-term traders. 

Options are attractively priced at the moment, per Wendy's Schaeffer's Volatility Index (SVI) of 54%, which stands higher than just 20% of all other readings from the past year, implying that near-term option traders are pricing in relatively low volatility expectations.

It's also worth noting that Wendy's stock usually underperformed options traders' volatility expectations in the last year. This is per its Schaeffer's Volatility Scorecard (SVS) of 18 out of 100. This makes the stock an intriguing premium-selling candidate.