The shares have pulled back to a trendline that's previously marked attractive entry points
The shares of Etsy Inc (NASDAQ:ETSY) gapped nearly 24% higher the session after the e-tailer's blowout earnings report in early November, eventually topping out at a record high of $58.30 on Dec. 4. The security has since pulled back amid broad-market headwinds, but is now trading near a trendline with historically bullish implications -- suggesting the retail stock could bounce quickly in the new year.
Specifically, ETSY shares are trading within one standard deviation of their 160-day moving average. Previous pullbacks to this trendline after the stock has been trading above it for a lengthy stretch have resulted in a one-month average gain of 14.34%, according to data from Schaeffer's Senior Quantitative Analyst Rocky White, with all six of the individual returns positive.
There's plenty of skepticism to unwind on a stock that's doubled in value year-over-year. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ETSY's 10-day put/call volume ratio of 3.25 ranks in the 100th annual percentile, meaning puts have been bought to open over calls at a quicker-than-usual clip.
And while short sellers have started throwing in the towel on their losing bets, there's still 9.35 million shares dedicated to these bearish bets. This accounts for a healthy 9.5% of Etsy stock's available float, and would take almost four days to cover, at the equity's average pace of trading.