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Murphy Oil (MUR) stock has bounced off this historically bullish trendline 5 times before
By: Schaeffer's Investment Research | August 2, 2021

• Several Reasons to Target This Cooling Energy Stock

• The security already sports an astounding 166.5% nine-month lead

Energy name Murphy Oil Corporation (NYSE:MUR) is down 2.6% to trade at $21.14 this afternoon, though a reason for today's negative price action is still unclear. The stock boasts an astounding 166.5% nine-month lead, though, and on June 25 hit an annual high of $25.97. Another reason why investors shouldn't scoff at the equity is that its latest pullback has positioned it in the vicinity of a trendline with historically bullish implications.

After a lengthy period above its 80-day moving average, Murphy Oil stock just came within one standard deviation of this key trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, five similar signals have occurred in the past three years. The equity enjoyed a positive return one month later in 50% of these cases, averaging a 5.1% gain. From its current perch, a comparable move would put MUR back over the $22 mark.



The brokerage bunch leans bearish towards Murphy Oil stock, with six of the 10 in question carrying a tepid "hold" or worse rating. Should some of that pessimism start to unwind, shares could move higher. The equity looks ripe for a short squeeze, too. Short interest rose 26.8% in the last two reporting periods, and the 15.30 million shares sold short make up 10.5% of the stock's available float, or over a week's worth of pent-up buying power.

A sentiment shift in the options pits would create additional tailwinds for MUR as well. Over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio sits higher than all but 9% of readings from the past year.

What's more, Murphy Oil stock's Schaeffer's Volatility Scorecard sits at 87 out of 100. In other words, the security tends to outperform these volatility expectations -- a boon for option buyers.

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