Fitbit No Longer A Hit?

Joel Elconin is the co-host of Benzinga's #PreMarket Prep, a daily trading idea radio show.

Fitbit Inc FIT shares were trading lower by $1.80 at $43.70 in Monday's session. With no specific news out on the issue, let's examine the technicals for a possible explanation for the steep decline.

After backing off from its all-time high made on July 15 ($48.78) and all-time high close the following day at $47.78, the issue began to find willing sellers in the $47 handle.

From July 17 to July 23, the issue made five consecutive highs between $47.03 and $47.43, a well-defined area for an issue that has been moving around $3 per day since its IPO on June 18. On that day, it bottomed at $29.50.

Last Friday, Fitbit open at its high for the day, which was just shy of the $47 handle at $46.70 and ended the session at $45.54. After a lower open in Monday's session, it was not even able to reach Friday's close, only hitting $45.23 before swooning to $41.70 then rebounding back above $43.

That low coincides with its July 10 low at $41.88. If the current intraday low is breached, the next identifiable support level may not be until the July 8 low ($40.61).

Shares of Fitbit have been attracting the short-selling crowd over the last few weeks. The cost of borrowing has spiked from 4.5 percent to over 16 percent in mid-July.