The cinema name Cinemark (CNK) has seen its fair share of choppy trade this year. Equity was riding the tail of the meme stock craze, names like AMC Entertainment (AMC) and Bed Bath & Beyond (BBBY) up and down the charts through bankruptcy issues and the like. Shareholders’ equity has been much lower lately, with pressure on the 10-day moving average, leading to a series of annual lows near the $13 level. Today’s price action has sunk CNK even deeper. The stock last fell 2.3% to $12.76, marking its lowest level since November 2020.
However, there is also good news. Amid these recent lows, the stock is also exhibiting historically low implied volatility (IV), which has led to a remarkable amount of upside in the past. According to data from Schaeffer’s Senior Quantitative Analyst Rocky White, there have been three similar signals in the past five years as the security traded within 5% of its 52-week low, while Schaeffer’s Volatility Index (SVI) is in its 40th percentile. annual range or lower. This is the case for CNK, which has an SVI of 56%, which is higher than just 9% of annual measurements.
The month following two of these signals generated positive returns, with CNK hitting an average of 13.6% over the period. A similar move from its current position would push the security just below $15, removing pressure on its 10-day moving average. It’s also worth noting that Cinemark stocks are just on the brink of “oversold” territory, according to the 14-day Relative Strength Index (RSI) of 30. This means that a short-term bounce may be just on the horizon.
Short sellers have started exiting Cinemark stock, down 15.7% in the last two reporting periods, but there’s still a lot of pessimism to unwrap. The 18.80 million shares sold short make up 17.5% of the stock’s available float, or more than seven days of accumulated buying power.
Meanwhile, short-term options traders are at their most put-heavy this year, according to Schaeffer’s put/call open interest ratio (SOIR) of 3.98, which is higher than all other measurements for the past 12 months.