Buy the Dip on Skechers Stock

Short sellers have been scattering on SKX

by Emma Duncan

Published on Aug 23, 2019 at 1:03 PM

Sneaker name Skechers USA Inc (NYSE:SKX) is moving notably lower this afternoon, last seen down 5.4%, at $29.46 -- falling in step with Foot Locker (FL) and Nike (NKE). Skechers stock has been on a downtrend for quite some time, but things may be looking up for the security, as data from Schaeffer's Senior Quantitative Analyst Rocky White suggests SKX may be readying for its next jump higher.

Specifically, Skechers stock has pulled back to long-term support at its 52-week moving average. Per White, there have been 13 other times the equity has come within one standard deviation of this trendline after a lengthy stretch above it, resulting in an average three-month gain of 16%, with 77% of the returns positive. A surge of this magnitude would put SKX above $34 by Thanksgiving.

Weekly SKX with 52MA

Skechers stock has had a volatile run on the charts this year, last month seeing a post-earnings bull gap that sent the shares to an annual high of $40.50 on July 19. And while the equity has pulled back in recent weeks, it remains 27.7% higher year-to-date.

Short interest has rolled back on SKX, down nearly 26% during the past two reporting periods. These bearish bets now account for over 5% of the stock's total available float, and it would take short sellers just three days to buy back their bearish bets, at the average daily pace of trading.

Those wanting to bet on another SKX stock rally off its 52-week moving average may want to consider a premium-buying strategy. The equity's Schaeffer's Volatility Index (SVI) of 35% ranks in the bottom 6th annual percentile. In other words, the equity's front-month at-the-money options have priced in lower volatility expectations just 6% of the time over the last year.
 
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


IRS Loopholes to Help Investors Protect Their Retirement
Transferring retirement savings into precious metals might be the best move to make in the current market climate.
Stocks Eye Weekly Wins Ahead of Earnings Season
U.S.-China trade chatter dominated headlines this week
Apple, Fastenal Stocks Flourish During Market Rally
Apple's added more than 15% in three months
The "Trick" Used By the World's Wealthiest
A simple way to stop picking losers, and start cashing in like Wall Street's elite.