Beware This Retailer, According to Technical Data

A signal just flashed on the charts that could put URBN stock in even more trouble

Urban Outfitters Inc (NASDAQ:URBN) has seen a rough couple of months, since pressure at its 120-day moving average capped the stock's three-month peak in April. Now, the stock is trading well below that trendline, down nearly 30% year-to-date. And whilethe $22.50 region has managed to catch some of the equity's losses, a historically bearish signal just sounded on the chart that could spell trouble for the clothing retailer.

Specifically, the equity just came within one standard deviation of its 40-day moving average after a lengthy period below the trendline. This signal has flashed 11 times prior, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. The security was only positive one month after these signals 18% of the time, averaging an 8.38% loss. From where it currently sits at $23.07, a similar move could have the stock trading back near its two-year lows, around $21.16.

While the majority of analysts are cautious on the stock, with 11 calling it a "hold," five in coverage still call it a "buy" or better, which could lead to even more headwinds, should some of these analysts start to sour on URBN. This goes for the equity's consensus 12-month target price of $31.88, which sits in an area that hasn't been topped since the security's April surge, and holds a 38.2% premium to current levels.

Surprisingly, short interest has begun to slowly unwind during the past two weeks, down 1.4%. This doesn't mean that these bears don't have a tight grip on the stock, with shares sold short representing 17% of its available float and 3.6 day of trading at the stock's average pace.

Should traders want to bet on URBN's next leg down, options might be an attractive choice. Right now, the security's Schaeffer's Volatility Index (SVI) of 33% sits in just the 7th percentile of its annual range. This means short-term options players are pricing in relatively low volatility expectations right now.