Will Kohl's Stock See a Much-Needed Santa Claus Rally?

A bull signal flashing for KSS could provide chart support

Digital Content Manager
Dec 20, 2022 at 3:15 PM
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The holidays have been anything but jolly for struggling retail stock Kohl's Corporation (NYSE:KSS). The shares have already lost over 21% in December, with a breakout last month contained at their 140-day moving average. KSS is once again nearing its Sept. 30 annual low of $24.61, last seen down 2.1% at $25.01. However, amid all this downside, a historically bullish signal is flashing that could give the stock a short-term boost. 

According to Schaeffer's Quantitative Analyst Rocky White, these lows come amid historically low implied volatility. This has been a historically bullish combination for KSS in the past. White's data shows three other signals in the last five years when the security was trading within 2% of its 52-week low, while its Schaeffer's Volatility Index (SVI) stood in the 20th percentile of its annual range or lower. This is currently the case with Kohl's stock's SVI of 53%, which stands in the 19th percentile of its 12-month range. 

One month after these signals, KSS was higher 67% of the time, and averaged a 1.7% return. While this isn't much of a rally, it could be the difference between Kohl's hitting a fresh annual low and turning higher in the new year. 

Options players have been incredibly bearish on Kohl's stock. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity sports a 50-day put/call volume ratio of 1.42, which sits higher than all but 2% of annual readings. In other words, puts have rarely been more popular. 

What's more, KSS' Schaeffer's Volatility Scorecard (SVS) comes in at 9 out of 100. In other words, the retailer has consistently realized lower volatility than its options have priced in, making the stock a potential premium-selling candidate.


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