Why Shopify Stock’s Rally Could Be Far From Over

SHOP sports a 99.7% year-to-date lead

Fernanda Horner

Digital Content Manager

Nov 21, 2023 at 2:48 PM

SHOP

E-commerce name Shopify Inc (NYSE:SHOP) is down 0.2% at $69.35 at last glance, but still sports a 99.7% year-to-date lead. The equity yesterday hit is highest level since July 14, when it nabbed a 52-week high of $71.43. With support back in place at its 100-day moving average after a bull gap earlier this month, and a historically bullish signal now flashing, SHOP's rally could be far from over.

SHOP 100 Day

Specifically, Shopify stock's recent peak comes amid historically low implied volatility (IV), which has has been a bullish combination in the past. Per Schaeffer's Quantitative Analyst Rocky White, there were six other signals over the past five years when SHOP was trading within 2% of its 52-week high, while its Schaeffer's Volatility Index (SVI) stood in the 20th percentile of its annual range or lower.

This is currently the case with the stock's SVI of 41%, which stands in the 5th percentile of annual readings. The shares were higher one month later after each of those signals, averaging a 6.9% rise. From its current level, a move of similar magnitude would place SHOP at a fresh one-year peak of $74.13.

An unwinding of pessimism at the options pits could result in additional gains. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day put/call volume ratio stands higher than 91% of readings from the past year.

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