The recent peak of W lies amid historically low implied volatility (IV).
The proportions of the furniture name Wayfair Inc (NYSE: W) are down 1.1% on the last check to $ 339.50. However, stocks have risen higher in the past few weeks after pulling back from an all-time high of $ 369 on Jan. 14. Additionally, security is backed by the 20-day moving average and is a staggering 627.9% year over year. Another reason investors shouldn’t look the other way just yet is that a historic bullish signal could point to further record highs for W in the near future.
The stock’s recent high lies amid historically low Implied Volatility (IV), which has historically been a bullish combination for the security. According to Schaeffer’s Senior Quantitative Analyst Rocky White, there have been two more times in the past five years that the stock has traded within 2% of its 52-week high while its Schaeffer Volatility Index (SVI) was in the 20th percentile of its annual range or lower. That is now the case with Ws SVI of 60%, which is in the seventh percentile of its 12-month range.
White’s data shows that one month after these signals, security was higher, achieving an average return of 11.2% for that period. From its current location, a similar magnitude move would bring W just above the $ 377 mark, a higher level than its January high.
Analysts are still hesitant about the stock price, leaving ample room for upgrades and / or price target hikes that could push stocks higher. Of the 22 questioned, 12 have a lukewarm “hold” or lower rating, while the remaining 10 say “strong buy”. Additionally, the 12-month consensus target of $ 321.38 is a 5.1% discount on current perch of equity.
A quick squeeze could generate additional gains for Wayfair stock. Short rates are up 10.4% over the last two reporting periods, and the 12.90 million shares sold account for a whopping 20.1% of the stock’s available free float, or purchasing power pent up over a week.
After all, that’s security Schaeffer’s Volatility Scorecard (SVS) is up 94 out of 100. This shows that the security has exceeded volatility expectations over the past year, which is good for option buyers.