Don't Skip This Historically Bullish Duolingo Stock Setup

Shares of Duolingo Inc (NASDAQ:DUOL) are 4% higher trade at $140.32 this afternoon, cooling off from a recent pullback below $140, where it found support at the 80-day moving average. However, this trendline has historically bullish implications, and despite sporting a 19% year-to-date deficit, more long-term gains could be on the way for DUOL.

Per Schaeffer's Senior Quantitative Analyst Rocky White, Duolingo stock has traded within 0.75 times the 80-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 the trendline. 

This setup has appeared six times over the last 10 years, after which the stock was higher one month later 67% of the time, averaging a large 12.4% gain. From its current perch, a move of this magnitude would put DUOL back above $157 and near its early September peak.

Though short interest has fallen 13.2% during the past two reporting periods, 16.6% of the stock's available float is still sold short. At the stock's average pace of daily trading, it would take short sellers over five days to buy back their bearish bets.

There is plenty of room for bull notes, too. Currently 18 of the 20 brokerages in coverage sport a "hold" or worse recommendation. Should this bearish sentiment begin to unwind, it could trigger a fresh round of upgrades for DUOL.