TTD just came within one standard deviation of a historically bearish trendline
Trade Desk, Inc. (NASDAQ:TTD) stock is underperforming on the charts, sporting a 41.1% year-to-date deficit. After suffering two pullbacks to the $40 area in May, the digital marketing stock was able to stage a small bounce, and boasts a 21% lead in the last 30 days. However, there's reason to believe TTD could be pressured lower once again, as the shares have just come within striking distance of a historically bearish trendline.
Specifically, Trade Desk stock just came within one standard deviation of its 40-day moving average after a considerable stretch below the trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, five similar signals have occurred during the past three years. In 80% of said occurrences, TTD moved lower in the ensuing month, averaging a significant 31.2% loss. From its current perch at $52.68, a move of similar magnitude would put the stock at $36.77 -- an area not touched since June 2020.
Options traders emphasized calls over the last two weeks, and an unwinding of this optimism is likely to also put pressure on the equity. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Trade Desk stock's 10-day call/put volume ratio of 2.79 ranks in the 73rd percentile of annual readings, which indicates a preference for bullish bets compared to the last 12 months.
Options look like the ideal avenue to pursue for those looking to speculate on TTD, as it sports relatively cheap premium. This is per the equity's Schaeffer's Volatility Index (SVI) of 73%, which stands higher than 24% of readings from the past year. What's more, Trade Desk stock has a knack for outperforming options traders' volatility expectations, according to its Schaeffer's Volatility Scorecard (SVS) of 86 (out of 100).
It's also worth noting that analysts are overwhelmingly bullish on the shares at the moment, and a shift in sentiment could cause additional pressure. Specifically, 12 of the 15 covering brokerages rate TTD a "buy" or better, and not a single "sell" recommendation is on the books.