Yeti Holdings (NYSE:YETI) beats the market trend

With two straight days of severe market declines, it’s odd to see a symbol show some green on a watchlist. I like to look for stocks that show relative strength to the market along with a bullish setup.

Yeti Holdings (NYSE:YETI) is one stock that beats the current market trend. Compared to the rest of the market, the stock finished down on par with the SPY. Normally, you would expect it to be off much more since it’s a momentum stock. That’s a key that it might be doing much better.

Now, let’s look at the hourly chart for confirmation.

YETI Hourly Chart

While the indices and the other markets fell from the open to the close each day, YETI did not. Instead, YETI turned in a positive performance on Monday compared to the disaster that was the SPY or QQQ

Take a look at the arrows I’ve marked on the chart. They show how price pushed off the gap down and then moved sideways into a consolidation pattern rather than sell off with the rest of the market.

This tells me that there’s a lack of sellers on this stock or that there’s a lot of buying interest. Given the volume over the last few days here, I’d say it’s more a lack of sellers.

So, that means when the market turns around, this stock will likely run harder than the other stocks.

For the trade I have two options: long calls or a put credit spread. Which I choose depends on the IV Rank of the stock. I want to sell into high implied volatility and buy in lower IV environments. 

Here’s what’s interesting – while IV exploded everywhere else, it’s still a paltry 15.6 IV rank for YETI. That means I want to buy call options here with low IV. That lets any expansion in IV work to increase my profits.