Shopify’s (SHOP.TO) relative strength has been quite volatile over time, particularly since last summer with the shares making several short round trips between the red zone and the green zone of the SIA S&P/TSX 60 Index Report. Even since the start of this year, SHOP.TO has shot up from the red zone to the top of the green zone, only to backslide toward the bottom of the Yellow Neutral Zone. Yesterday, SHOP.TO dropped 18 spots to 29th place but even with that decline, it is still up 15 positions over the last month.
Shopify (SHOP.TO) has been under pressure in the wake of last week’s quarterly report and guidance. A breakaway gap to the downside on a spike in volume signaled a decisive bearish shift in sentiment and confirmed resistance in place near $72.50. The shares have since dropped back under $60.00 to take out the previous breakout point and confirm the start of a downswing.
Technical signals have not all been bearish, however, and currently suggest that we could be in a sharp correction within on ongoing recovery trend. As the selloff has progressed, volumes have been falling, suggesting selling pressure may ease once the weakest hands are shaken out. Longer-term uptrend support near $52.50 has held so far as has the 50-day average, with additional support possible near the $50.00 round number.
Shopify shares were looking good up until late last week when they faltered short of downtrend resistance near the $75.00 round number and peaked in a bearish Bull Trap (circled) where they broke out by one row, then rolled downward. A bearish Double Bottom breakdown called off previous double top and bullish catapult patterns and the selloff has extended into a bearish Low Pole.
While recent trading has been bearish, so far this selloff appears to be more of a trading correction as the underlying uptrend has so far remained intact. Initial support appears near $53.05, where an uptrend line and a previous breakout point converge, followed by the $50.00 round number. Initial resistance on a bounce appears near $60.95 based on a 3-box reversal.
With SMAX score decreasing to a bearish 5, SHOP.TO is exhibiting weakness against the asset classes.
Disclaimer: SIACharts Inc. specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investors investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIACharts Inc. nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.
