Check Out of Hilton Stock Ahead of Earnings

Hilton stock is flashing a bearish technical signal ahead of next week's earnings

The shares of Hilton Hotels Corporation (NYSE:HLT) have recently attempted a rally off their late-December drop -- up nearly 13% since hitting a two-month intraday low of $65.63 on Dec. 24. As the hotel concern prepares to release its upcoming earnings report, which could determine the stock's next move, the equity just sent up a historically bearish signal that has never been wrong.

Specifically, the security just came within one standard deviation of its 160-day moving average after a lengthy stretch below the trendline. The equity has tested resistance at this trendline in a similar manner just four other times in the past three years, and has been lower one month later each time -- averaging a loss of 5.2% post-signal. From its current perch at $73.98, a move of similar proportions would knock the stock back near $70.13 by this time next month.

It looks like short sellers have been hitting the exits, with short interest down 18.4% over the past two reporting periods, and now representing only 3.8% of Hilton stock's available float. However, options traders appear to be clinging to their pessimistic positions. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), HLT's 50-day put/call volume ratio of 1.89 stands in the 97th percentile of its annual range. This means that puts bought to open have nearly doubled calls in recent months, marking a near-annual peak of bearishly skewed option activity.

By contrast, the majority of analysts remain positive on the stock, with 12 "buy" or better ratings on the table, four "holds," and not a single "sell." Plus, the consensus 12-month price target of $82.59 represents an area not touched by HLT since late July. This leaves the door wide open for potential analyst downgrades or price-target cuts.