Etsy Just Hit The Lower Rail Of An Upwardly Sloped Trend Channel

Most “buy” and “sell” ratings are formed by a human analyst. Sure they may look at the same factors, but the ultimate rating comes down to a human or a group of humans determining what to rate the stock.

I bring this up because there are 15 analysts following Etsy at this time and 13 of the 15 have the stock rated as a “buy”. There is one “hold” rating and one “sell” rating at this time. If we look at the buy ratings as a percentage of the total, the buy percentage is 86.7% and that is extremely high. That is one concern I have about the stock. Looking back at the fundamental screener, the stock is overvalued at this time and that is a secondary concern.

Momentum is Still to the Upside

Shifting our focus to the technical analysis, we see on the weekly chart how a trend channel has formed over the last 13 months. The upper rail defines the angle more than the lower rail at this point. The highs from last May and August, along with February of this year, form the upper rail. The parallel lower rail connects the low from last November with the lows from last month.

(Click on image to enlarge)

Looking at the overbought/oversold indicators we see that the weekly stochastic indicators dropped down near the 50 level in the last few months and have now made a bullish crossover. We see similar circumstances in September and November of last year. The stochastic indicators haven’t been below the 50 level since last April.

The 10-week RSI is hovering around the 60 level and it also hasn’t been below the 50 level since last April.

Looking at the Tickeron technical analysis screener we see that the stock has received three bullish signals in the last few days. The MACD indicator, Momentum indicator, and the Moving Average indicator all generated bullish signals two trading days ago. All three signals show a high probability of another move higher in the coming weeks. I should mention that the technical analysis screener is based on daily technical indicators rather than weekly ones.

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