Zebra Technologies (ZBRA) Is a Good Contrarian Play

03/17/2010 12:01 am EST


Nick Perry

Equity Options Trader, Schaeffer's Investment Research

Zebra Technologies Corp. (ZBRA) looks to be a potentially interesting situation from the contrarian perspective. The equity has been rallying steadily for a year, but there are few signs of optimism. Here's a look at the sentiment backdrop.

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The chart below shows the steady pattern of higher highs and higher lows. It also shows that shares of Zebra Technologies have pushed through resistance. Despite this positive price action, expectations seem subdued. Heading into today's new high, only two of nine analysts ranked the stock with a buy rating.

The Schaeffer's Put/Call Open Interest Ratio (SOIR) has been moving higher, but open interest is light, so I wouldn't view that as a major source of skepticism. However, the light open interest also means that few are speculating with call options, which I find encouraging. In other words, few seem to be betting on a big move.

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On a short-term basis, Zebra Technologies is overbought, but the intermediate-term price action looks constructive.

By Nick Perry of Schaeffer’s Trading Floor Blog

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