Retail stock Williams-Sonoma Inc (NYSE:WSM) was last seen up 3.3% at $170.40, rebounding from its recent slide. The $180 level has given WSM some trouble for the past couple months, but this next run could finally push the stock above it. Per Schaeffer’s Senior Quantitative Analyst Rocky White, the recent pullback has the equity within striking distance of its 50-day moving average, a historically bullish signal.
More specifically, the stock is within 0.75 of the 50-day trendline’s 20-day average true range (ATR) after spending at least 80% of the last 10 days and 80% of the last two months above it. Within these parameters, 11 other signals occurred in the past three years. WSM was higher one month later 82% of the time following these events, averaging a 7% gain. A move of similar magnitude from its current perch would put the shares above $182.
Furthermore, though short interest has just begun to slowly unwind, it still represents 5% of the stock’s available float, or over three days’ worth of pent-up buying power, at WSM’s average pace of trading.
Options traders are pricing in low volatility expectations, per WSM’s Schaeffer’s Volatility Index (SVI) of 39%, which ranks in the low 4th percentile of its annual range. It’s also worth noting that the stock has tended to outperform these volatility expectations, per its Schaeffer’s Volatility Scorecard (SVS) of 82 out of 100.
