Ross Stores Stock's Bearish Signal Has Never Been Wrong

A shit in analyst sentiment could further pressure ROSS

Deputy Editor
Oct 4, 2022 at 1:47 PM
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Ross Stores, Inc. (NASDAQ:ROST) is moving higher today, last seen up 3.5% to trade at $88.98 and pacing for its fifth daily win in six. Though the catalyst for today's positive price action is unclear, the equity has fared considerably well over the last three months, adding 20.2% despite a 2.3% dip in September after its mid-month pop was cut short at the $96 level. However, today's pop has put the equity in line with a historically bearish moving average that could see its upward efforts stalled.

The trendline in question is Ross Stores stock's 180-day moving average, which the shares just came within one standard deviation of after trading well below it for much of the year. Per data from Schaeffer's Senior Quantitative Analyst Rocky White, five similar signal have been observed in the last three years. After all of these of these occurrences, the stock was lower, averaging a one-month drop of 7.1%. A similar move from its current perch would put ROSS at $82.66.

ROST Chart October 032022

Looking at the rest of the brokerage bunch, 10 of the 16 analysts following the stock consider ROST to be a "strong buy," while the other six say "hold." An unwinding of this optimism could also weigh on the shares. Meanwhile, the consensus 12-month target price of $98.96 is an 11.2% premium to the equity's current level.

Options look like a an ideal way to speculate on the equity's next move. This is per the security's Schaeffer's Volatility Scorecard (SVS) of 76 out of 100, which indicates the stock has consistently realized bigger returns than options traders have priced in over the last 12 months.

 

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