Tailwinds Could Keep Blowing for Zscaler Stock

The equity earlier reached a fresh 52-week peak

Digital Content Manager
Oct 10, 2023 at 3:19 PM
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Zscaler Inc (NASDAQ:ZS) stock is outperforming the broader market, up 52.6% so far in 2023. The equity earlier reached a new one-year high of $173.95, and was last seen up 1.3% to trade at $171.06, as it bounces off long-term support at its 100-day moving average. This rally may be just the beginning of something bigger for ZS, which is also flashing a historically bullish signal.

ZS 100 Day

According to Schaeffer's Quantitative Analyst Rocky White, today's peak comes amid historically low implied volatility (IV), which has been a bullish combination for the stock in the past. White's data points to seven other signals over the last five years when the equity was trading within 2% of its 52-week high, while its Schaeffer's Volatility Index (SVI) was in the 20th percentile of its annual range or lower.
 
This is now the case with the equity's SVI of 45%, which is in the 19th percentile of its annual range. One month after these signals, the shares were higher 71% of the time, averaging a 4.4% gain. From its current trading level, a similar move would put Zscaler stock back above $178.
 
Short sellers are already hitting the exits, but there is ample pessimism left to be unwound. Short interest is down 12.8% in the last two reporting periods, yet the 5.34 million shares sold short still make up a significant 6% of the security's available float.
 
A sentiment shift in the options pits could also generate tailwinds. This is per the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.02 that stands in the 97th percentile of annual readings.

 

 

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