Solar Stock Could Bounce From Trendline Support

A long-term trendline could prove pivotal for RUN traders

Scanning some of our internal data today, one name worth looking at is Sunrun Inc (NASDAQ:RUN). That's because the shares have been testing their 320-day moving average, and the trendline seems to be serving as technical support. That wouldn't be too surprising, since data from Schaeffer's Senior Quantitative Analyst Rocky White shows the stock's three previous pullbacks to this moving average have resulted in an average one-month gain of 20.7%.

Also, you can see on the chart this trendline is right above the $14.50 mark that acted as support on two previous occasions in 2019, after serving as a ceiling in late 2018. This could suggest RUN stock is on strong technical footing after consolidating in the aftermath of last month's bear gap.

Options bulls have been moving in, too. Data from the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day call/put volume ratio of 27.88, which ranks in the 94th annual percentile, so there's been extremely strong demand in long calls lately. More broadly speaking, peak open interest is at the November 22 call.

Analysts are also on board with the solar stock. By the numbers, five of six in coverage have handed out "strong buy" recommendations, and the average 12-month price target is up at $22.40. On the other hand, short interest remains high, accounting for almost seven days' worth of buying power, based on the average trading volume.

Considering all this, another rally from the 320-day could find legs should short sellers begin covering. On the other hand, a breach of this technical region could signal underlying weakness, and a sharper sell-off could produce analyst bear notes.