Outperforming Avis Budget Group Stock Could Have More Room to Run

Stocks have been marching higher -- and could have more room to run -- and one sector that has not been left behind is what we call the Autos and Parts group. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, 97% of the the stocks we cover from this sector are currently trading above their 80-day moving average, and have an average year-to-date gain of over 23%. Take Avis Budget Group Inc. (NASDAQ:CAR) for example, which is up 30% year-over-year and just crossed a key technical level.

Jumping right in, CAR stock was last seen trading at $41.36, putting it just above the round $40 level. This region is home to a 38.2% Fibonacci retracement of the equity's 2014 record high and its most recent low from June 2017. This is also just above the security's 36-month moving average.

As you can see in the chart below, this entire region had acted as resistance from late 2016 and early 2017. Overall, Avis Budget stock has outperformed the S&P 500 Index (SPX) by 21 percentage points during the past three months, and is pacing for a fifth straight monthly win.

Especially when you consider the shares have just cleared a seemingly significant level, an extended round of short-covering could mean more upside for CAR. For instance, short interest has been declining since hitting an all-time high in July, yet the 29.1 million shares still controlled by these bears equates to more than 11 times the stock's average daily trading volume. In other words, there's still plenty of buying power on the sidelines.

Bullish or bearish, it's a good time to target Avis Budget Group's short-term options. This is evidenced by its Schaeffer's Volatility Index (SVI) of 52%, which ranks in the bottom one-third of its annual readings. Said differently, volatility expectations for near-term options are unusually muted at the moment.

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