Aerospace and defense stock Lockheed Martin Corp (NYSE:LMT) is in the midst of a downtrend, with losses stacking up after the company missed revenue expectations in late October. Shares were last seen 0.8% lower at $485.15, and are pacing for their 15th loss in 20 sessions.
The equity has shaved its year-to-date gain to just 6.8% after erasing 17.2% this quarter, but the silver lining is that this drawdown presents a unique buying opportunity, according to historical trends.
Per Schaeffer's Senior Quantitative Analyst Rocky White, LMT is within striking distance of its 320-day moving average after trading above the moving average 80% of the time over the past two months, and closing north of the trendline in eight of the last 10 sessions.
According White's study, four similar signals occurred in the past three years, and Lockheed Martin stock was higher one month after each occurrence, averaging an 8.2% gain in the following 21 days. A similar move from its current perch would nearly fill LMT's 8.4% 30-day deficit.
Helping the case for a rebound case is the shares' 14-day relative strength index (RSI) of 34.1, which hovers near "oversold" territory. An unwinding of pessimism in the options pits could add more tailwinds. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day put/call volume ratio of 0.50 stands higher than 97% of readings from the past 12 months.
The stock tends to outperform volatility expectations over the past year, too, per its Schaeffer's Volatility Scorecard (SVS) of 95 out of 100. This is a boon for premium players that want to speculate on the potential positive price action.