A surefire bullish signal is flashing for SHOP
E-commerce name Shopify Inc (NYSE:SHOP) is down 0.2% at $69.35 at last glance, but still sports a 99.7% year-to-date lead. The equity yesterday hit is highest level since July 14, when it nabbed a 52-week high of $71.43. With support back in place at its 100-day moving average after a bull gap earlier this month, and a historically bullish signal now flashing, SHOP’s rally could be far from over.
Specifically, Shopify stock’s recent peak comes amid historically low implied volatility (IV), which has has been a bullish combination in the past. Per Schaeffer’s Quantitative Analyst Rocky White, there were six other signals over the past five years when SHOP was trading within 2% of its 52-week high, while its Schaeffer’s Volatility Index (SVI) stood in the 20th percentile of its annual range or lower.
This is currently the case with the stock’s SVI of 41%, which stands in the 5th percentile of annual readings. The shares were higher one month later after each of those signals, averaging a 6.9% rise. From its current level, a move of similar magnitude would place SHOP at a fresh one-year peak of $74.13.
An unwinding of pessimism at the options pits could result in additional gains. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock’s 50-day put/call volume ratio stands higher than 91% of readings from the past year.