Market Overview

Shopify's Stock Is Testing A Key Technical Level

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Shopify's Stock Is Testing A Key Technical Level

Shopify Inc (NYSE: SHOP) shares have more than tripled in the past year, but the stock ran out of gas at around $410 back in August. After a pullback to $282 and a strong rally in the past month, Shopify is entering the last two weeks of 2019 knocking on a key technical resistance level.

The all-time high in the $410 region was resistance back in August, and the $282 to $286 level served as support in September and November. On Wednesday, Shopify shares were up another 3.4% above $400, topping out at $404.80 in intra-day trading as of 12 p.m. ET.

The chart below shows the wide technical trading range that has bound Shopify shares for roughly the past six months.

Shopify message sentiment on StockTwits has been drifting lower from a peak of 89.3% bullish on Nov. 30. Bullish sentiment is now down to just 71.5%, suggesting traders are losing faith in the stock as it approaches its all-time high.

Olivetree's Outlook

Dan Forman, Olivetree sector strategist, said this week the holiday shopping season may be enough of a near-term catalyst to get Shopify over the hump. In the longer term, Forman said Shopify is a secular growth story.

“We have long argued the stock is a secular long for continued upward revisions, incredible growth, subscription services, shopify plus, the defacto best platform play for commerce in the market-place, the exposure from a portfolio perspective to themes like CBD/Province of Ontario, Shopify Capital, and now the co. is pushing much more aggressively into Fulfillment,” Forman said.

Benzinga’s Take

If Shopify breaks through $410 after its extended consolidation period, it could be off to the races for another large leg up for the stock. However, if the breakout attempt fails in coming days, the $410 resistance will be strengthened and Shopify shares could be headed back down to the low end of the trading range in the $280s.

Shopify's stock traded at $400.50 per share at time of publication.

Do you agree with this take? Email feedback@benzinga.com with your thoughts.

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Latest Ratings for SHOP

DateFirmActionFromTo
Apr 2020MizuhoMaintainsNeutral
Apr 2020Raymond JamesMaintainsOutperform
Mar 2020Piper SandlerMaintainsNeutral

View More Analyst Ratings for SHOP
View the Latest Analyst Ratings

 

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