Short sellers are already hitting the exits
Zscaler Inc (NASDAQ:ZS) stock is outperforming the broader market, up 52.6% so far in 2023. The equity earlier reached a new one-year high of $173.95, and was last seen up 1.3% to trade at $171.06, as it bounces off long-term support at its 100-day moving average. This rally may be just the beginning of something bigger for ZS, which is also flashing a historically bullish signal.
According to Schaeffer’s Quantitative Analyst Rocky White, today’s peak comes amid historically low implied volatility (IV), which has been a bullish combination for the stock in the past. White’s data points to seven other signals over the last five years when the equity was trading within 2% of its 52-week high, while its Schaeffer’s Volatility Index (SVI) was in the 20th percentile of its annual range or lower.
Short sellers are already hitting the exits, but there is ample pessimism left to be unwound. Short interest is down 12.8% in the last two reporting periods, yet the 5.34 million shares sold short still make up a significant 6% of the security’s available float.
A sentiment shift in the options pits could also generate tailwinds. This is per the equity’s Schaeffer’s put/call open interest ratio (SOIR) of 1.02 that stands in the 97th percentile of annual readings.