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Viewing Sherwin Williams' $25 Per Share Loss Through Benzinga's Securities Lending Volatility Index

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Viewing Sherwin Williams' $25 Per Share Loss Through Benzinga's Securities Lending Volatility Index

Benzinga’s Securities Lending Volatility Index (SLVX), powered by Tidal Markets, is an indicator that forecasts stock market activity for broader indices and individual securities.

As an example of the SLVX's utility as a stock market indicator, take a look at how changes in the SLVX anticipated a -5.97 percent decline in Sherwin-Williams Co. (NYSE: SHW) over 17 trading days throughout the month of May 2019.

Sherwin-Williams develops, manufactures, distributes, and sells paints, coatings, and related products to professional, industrial, commercial, and retail customers.

Throughout April, SHW experienced a 4.96 percent growth in share price due to a strong earnings report on March 31st, with first quarter revenues at $4,040.90, up roughly 2 percent year-over-year, due to increased paint sales in North American stores.

As the value of SHW grew throughout the month of April, SLVX values remained at muted levels, signifying that the growth in share price was justified by the overall sentiment of investors.

But just as the month of April came to an end, after the first week of trading into May we began to see the SLVX spike to over 140 percent on May 10th, 2019. On the following trading day, SHW fell -2.05 percent while the SLVX remained high. Despite what seemed like a bounce-back in share price between May 16th and 17th, the SLVX remained at higher than usual levels, and as subsequent trading days ensued SHW continued its descent as the SLVX had successfully indicated.

On the beginning day of our analysis, 5/8/2019, the SLVX reflected a volatility rate of 3.558 – which is below their 1Q19 average SLVX volatility of 2.84. But as SHW rose in price, the SLVX jumped to 8.566 on May 10th.

Date

SHW

SLVX

5/8/2019

$       444.51

3.558

5/9/2019

$       441.96

3.452

5/10/2019

$       439.92

8.566

5/13/2019

$       430.89

7.883

5/14/2019

$       434.41

7.263

5/15/2019

$       430.92

6.449

5/16/2019

$       433.28

6.542

5/17/2019

$       435.68

6.064

5/20/2019

$       424.51

6.422

5/21/2019

$       431.92

4.403

5/22/2019

$       431.44

4.414

5/23/2019

$       430.57

4.369

5/24/2019

$       430.72

4.504

5/28/2019

$       427.03

4.106

5/29/2019

$       426.44

4.113

5/30/2019

$       424.57

4.378

5/31/2019

$       419.45

4.254

Figure 1

image1_5.jpg

Figure 2

Between May 8th and May 31st, 2019, Sherwin-Williams lost -5.97 percent, or $25.06 per share, over a 17-day stretch. Meanwhile, the SLVX saw the volatility of SHW both rally over 140 percent to levels over 8, before falling in volatility as the share price of SHW continued to decline.

Volatility has stabilized as we've continued to watch SLVX values of SHW into the beginning of June, although the volatility of SHW remains nearly double its first-quarter average. Unless the SLVX of SHW tapers off, expect to see choppier waters ahead before looking for a potential buy-back opportunity.

Posted-In: Markets Trading Ideas General

 

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