Birkenstock and Texas Instruments are two stocks with enticing technical setups
Subscribers to Chart of the Week received this commentary on Sunday, July 14.
Every year at Schaeffer’s we look forward to celebrating our company’s anniversary with all of you, our loyal readers and subscribers, by gifting a free report of our trader’s top stock picks. The year 2024 ushered in our 43rd rotation around the sun as one of the first companies to be at the forefront of options trading. Founder Bernie Schaeffer insisted that moving in the direction of options-centric trading was the route the company would take, and more than four decades later, we are excited to share the first set of stock picks our team of top traders have carefully chosen for your portfolio.
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First up is Birkenstock Holding PLC (NYSE:BIRK), in which a previous earnings report took the shares above its $46 initial public offering (IPO) price and to a fresh all-time high. The equity used these previous highs as support on its most recent pullback in addition to the 30-day moving average and $10 billion stock valuation. Since its IPO, the footwear name has climbed 39%, compared to the S&P 500 Index’s (SPX) 25% gain.
BIRK is moving in as a 40- and 60-day relative strength (RS) leader, while short interest is on the rise. Accounting for nearly 15% of the stock’s total available float, short interest climbed 75% over the past three quarters. There has been 6.86 puts bought-to-open for every call, and while we don’t have a rank on this yet due to limited data, five of the top eight open interest (OI) positions are put-based.
Another stock that caught our eye is Texas Instruments Incorporated (NASDAQ:TXN), whom in the first quarter of 2024, broke and closed above their 2022-2023 highs, an area which marked resistance around $185-188 and corresponded with the +10 percent year-to-date level. In May, a brief close above the round-number $200 mark, which corresponds to the stock’s 2021 high, led to a consolidation. This has continued, as the 10-week and 50-day moving averages play catch up.
Despite decent price action, there is lukewarm sentiment from the analyst community. Currently 19 of the 28 brokerages following the stock sport a tepid “hold” or worse recommendation, leaving ample room for bull notes in the days and weeks ahead. Short interest has risen 42% since mid-February and currently would take four days to cover at the stock’s average pace of daily trading, as most of these positions are losses.
