Cloud Stock Could Bounce Off Bullish Trendline

The stock has been slipping from its April highs

Deputy Editor
May 2, 2022 at 3:15 PM
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Cloud stock Akamai Technologies Inc (NASDAQ:AKAM) has been slipping since an April 15 peak of $123.25, which fell just short of its Jan. 27, 2021 record high of $124.91. AKAM is down 1.3% at $110.80 at last check, while carrying a 5.5% year-to-date deficit. However, this pullback could be short-lived, as the stock is flashing a historically bullish signal on the charts.

AKAM just came within one standard deviation of its 320-day moving average. According to a study from Schaeffer's Senior Quantitative Analyst Rocky White, six similar occurrences have been seen during the past three years. Akamai Technologies stock was higher one month later 67% of the time, and averaged a 5.1% positive return in this time period. Plus, the security was higher one week later in 100% of those cases, averaging a 3.3% return. 

AKAM May 2

An unwinding of short interest could provide tailwinds as well. The 13.40 million shares sold short account for 8.5% of the stock's available float, or more than eight days' worth of pent-up buying power. 

Plus, there's room for an optimistic shift in the options pits, though overall volume has remained low. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 1.35 puts have been bought for every call in the last five weeks. This ratio stands higher than 82% of readings from the past year, showing a stronger-than-usual penchant for puts of late. 

 
 

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