Canada-based Wheaton Precious Metals (WPM) streams exactly what its name implies—precious metals. The stock itself has had a solid year, up roughly 10% in 2023. And despite a 2% weekly gain so far, the recent price action has WPM encountering a historically bearish trendline.
The equity just came within one standard deviation of its 60-day moving average after a lengthy stretch below the trendline, defined for this study as having traded south of the moving average 80% of the time in the past two months and in eight of the last 10 trading days. According to data from Schaeffer’s Senior Quantitative Analyst Rocky White, six similar signals have occurred during the past three years. The stock moved lower in the ensuing month in every one of those instances, averaging an 7.4% loss in that timespan. From its current perch at $43, a move of similar magnitude would put the shares near $40, its lowest trading level since March.
Downgrades could also weigh on the shares. A solid 10% year-to-date gain is nice, but eight of the 11 analysts maintaining “buy” or better ratings with zero “sells” is awfully bullish and could result in adjustments if underperformance occurs.
Whatever the direction, WPM’s SVI of 27% is higher than just 10% of all other readings from the past year, suggesting near-term option contracts are attractively priced at the moment, from a historical volatility standpoint.