Don’t Expect Energy Stock’s Pullback to Last

EQT could soon attempt another rally to the $40 level

EQT Corp (NYSE:EQT) stock is down 1.8% at $38.01 this afternoon, brushing off a price-target hike from Truist Securities to $41 from $37, as it struggles with pressure from its 40-day moving average. Shares came just shy of the $40 level in December, but still sport a 13.6% year-to-date gain. The stock’s Nov. 3, 52-week high of 45.23 is far in the rearview. However, EQT could soon erase some of this pullback, thanks to a historically bullish trendline.

Digging deeper, EQT stock is within one standard deviation of its 260-day trendline. Per data from Schaeffer’s Senior Quantitative Analyst Rocky White, the security saw at least six similar signals over the last three years, defined for this study as having traded north of the moving average 80% of the time in the last two months, and in eight of the past 10 trading days.

EQT was higher one month later in 83% of those instances, with an average 4.9% gain. A move of similar magnitude from its current perch would place the security closer to $40 again.

Short interest is unwinding, down 11.3% in the most recent reporting period, but there’s still plenty of pessimism left to unravel, which would boost the shares. The 20.16 million shares sold short account for 5.2% of EQT’s available float, or roughly four days’ worth of pent-up buying power.

What’s more, premiums are affordably priced. The security’s Schaeffer’s Volatility Index (SVI) of 32% ranks higher than 19% of annual readings. In other words, options players are pricing in low volatility expectations.