Why Struggling Sonos Stock Could Stage a Bounce Soon

The security hit a nearly two-year annual low today

Digital Content Manager
Sep 1, 2022 at 12:28 PM
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Since suffering a massive bear gap following its fiscal third-quarter earnings report, the shares of Sonos Inc (NASDAQ:SONO) have been on a downward spiral that's culminated in today's nearly two-year low of $14.76. However, there's reason to believe SONO could stage a bounce, based on a historically bullish signal flashing on the charts. 

According to a study from Schaeffer's Senior Quantitative Analyst Rocky White, SONO's multi-year low also comes amid historically low implied volatility (IV) -- a bullish combination for SONO during the past five years. In fact, during this time period, there have been two other instances where the equity was trading within 2% of a 52-week low, while its Schaeffer's Volatility Index (SVI) sat at a relatively low annual percentile, as is the case with Sonos stock's SVI of 49%, which sits higher than just 26% of readings from the past year. 

One month after these signals, the security averaged a 13.5% pop. From its current perch, a similar move would put SONO just below the $17 region, and above recent pressure at the stock's 10-day moving average. 

sono sept 1

Short interest has begun to roll over, down 8.6% in the last two reporting periods, however, there's still plenty of bearishness to be unwound. The 10.64 million shares sold short make up 8.5% of the stock's available float, and would take nearly four days to cover at SONO's average daily pace of trading. 

 

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