Datadog Inc. (DDOG), with a market capitalization of $52 billion, provides tools to help businesses monitor the performance of their websites, apps, and servers. It collects data from various systems to detect issues, enhance performance, and maintain smooth operations. With user-friendly dashboards and alerts, Datadog enables teams to resolve problems quickly before they affect end users. DDOG is a member of the SIA Favored Software sector and a constituent of the SIA NASDAQ 100 Index Report, where it has now entered the SIA Favored green zone. The stock has garnered attention over the past month, as DDOG shares have returned 14.35%, 22.18% over the past quarter, and 18.52% year-to-date (YTD), compared to the Invesco QQQ Trust returns of 1.92%, 4.81%, and 23.85% over the same time frames, indicating a recent outperformance. This performance can be visualized using the SIA system with the Matrix Position Chart, which shows DDOG shares rising through the SIA NASDAQ 100 Index Report from the yellow zone into the Favored Green Zone (see table above). The first chart presented is a weekly candlestick chart, with short-term trendlines drawn in black, indicating an upward channel, which terminates at a price of $160. This price is also noted as resistance with the lower red line. A red line has also been added just below the $200 level to highlight a prior peak in 2021, where shares reached their all-time high. Any remaining shareholders from that period may be pleased to have the price return to their purchase price but might also be more likely to sell at this level, potentially creating resistance for buyers. Support is indicated by the green lines at the $120 and $130 levels, which the current weekly candlestick has now surpassed on a notable spike in volume.
The second chart is a point-and-figure (PNF) chart, scaled at 2%, providing more precise support and resistance levels. Initial support is at $130.74, based on the 3-box reversal level, with additional support at $123.20, extending back to 2022, and further support at $116.10 from late 2020. Resistance levels include $159.38, followed by $175.96, with the top resistance line at $198.16, not far from the psychological $200 mark, where whole numbers are often seen as key levels. The computer software sector has become a bright spot in the market this past quarter, and Datadog has shown strong performance, as reflected in its SIA SMAX reading of 7 out of 10, as well as its position in the Favored Zone of the SIA Matrix reports. Also notice on the PNF chart a black double-sided arrow, marking the current trading range between $130 and $160.
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