Historically Bullish Signal Could Help Etsy Stock Find its Footing

An unwinding of pessimism could create tailwinds for ETSY

Deputy Editor
Dec 15, 2021 at 3:19 PM
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It's been a roller coaster of a year for Etsy Inc (NASDAQ:ETSY), with the equity running into multiple speed bumps in 2021 before skyrocketing to a record high of $307.75 in late November. The peak was short-lived, and in early December, ETSY once again succumbed to long-term pressure at its $250 region, which is also home to the stock's previous March peak. The stock's luck seems to be turning around, however, as this  recent pullback was deftly captured by familiar support at the 200-day moving average, which could have bullish implications, if past is precedent. 

According to data from Schaeffer's Senior Quantitative Analyst Rocky White, ETSY just came within one standard deviation of its 200-day moving average after a lengthy period above the trendline. White's data shows three similar instances occurring in the last three years. One month later, the equity was higher 67% of the time, averaging a 5.5% pop in that time period. A similar move would put the stock just above the $231 area. 

etsy dec 15

A short-term bounce could already be in the cards for Etsy stock. This is per its 14-day relative strength index (RSI) of 27, which sits firmly in "oversold" territory. What's more, a short squeeze could already be well underway, and a further unwinding of these bearish bets could help push the equity higher. Short interest has dropped 10.9% in the last two reporting periods, but the 9.35 million shares sold short make up 7.4% of the stock's available float, or nearly a week's worth of pent-up buying power. 

A shift in sentiment among options traders could also create tailwinds. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Etsy stock sports a 10-day put/call volume ratio of 1.04, which stands higher than 90% of readings from the past year, implying long puts are more popular than usual. Short-term options traders have rarely been more put-biased, either. The security's Schaeffer's put/call open interest ratio (SOIR) of 1.28 sits in the 90th percentile of its 12-month range. 

 

 




 
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