RTX Stock Could be Armed for a Rebound

Defense stock RTX Corp (NYSE:RTX) pulled back after hitting a record high of $226.88 on Aug. 10. And though the drawdown has the shares dipping slightly below long-term support at the 260-day moving average, they could still use the historically bullish trendline as a springboard.

Per Schaeffer's Senior Quantitative Analyst Rocky White, RTX has traded 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 the trendline. This setup has occurred five other times over the last decade, after which the stock was higher one month later every time, averaging an 6.3% gain.

Furthermore, RTX's 14-day Relative Strength Index (RSI) of 25 sits firmly in "oversold" territory, suggesting the shares could be due for a short-term bounce. 

Although calls are still winning out on an absolute basis, puts have been more popular than usual in the options pits. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and Nasdaq OMX PHLX (PHLX), RTX's 50-day put/call volume ratio of 0.48 ranks in the 91st percentile of its annual range. An unwinding of this pessimism could provide additional tailwinds for the stock.