TWLO has been pulling back since its late-September peak
Cloud concern Twilio Inc (NYSE:TWLO) is down slightly in afternoon trading, with the shares last seen at $74.03. The stock has been pulling back since last month's record high, and is now nearing a key trendline that's marked attractive entry points for a bullish short-term trade in the past.
Looking closer at the charts, TWLO nearly quadrupled from its early February low of $23.25 to its Sept. 28 record peak at $88.88. However, the security has shed almost 14% so far this month, and is now trading within one standard deviation of its 80-day moving average.
According to data from Schaeffer's Senior Quantitative Analyst Rocky White, there have been four other times Twilio has pulled back to this trendline after a lengthy stretch above it. After these signals, TWLO stock averaged a five-day return of 9.53%, with 100% of those returns positive. Going out one month, the shares averaged a gain of 7.5%, with half of the returns positive.
Amid its long-term outperformance, analysts are bullish toward the software stock. Specifically, all 15 firms following TWLO sport "buy" or "strong buy" recommendations, while the equity's average 12-month price target of $85.73 is a 15% premium to current levels.
Plus, now seems to be an attractive time for near-term traders to trade Twilio stock with options. This is based on the security's Schaeffer's Volatility Index (SVI) of 57%, which sits in the low 28th annual percentile, indicating muted volatility expectations are being priced into short-term contracts.
What's more, the security's Schaeffer's Volatility Scorecard (SVS) stands at 87 out of a possible 100. This shows the software stock has tended to make larger-than-expected moves on the chart over the past year, relative to what the options market has priced in.