Bearish Signal Could Cut Fastly Stock Rally Short

The stock is down more than 60% in 2022

Deputy Editor
Jul 7, 2022 at 11:21 AM
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The shares of Fastly Inc (NYSE:FSLY) are popping today, last seen 6.8% higher to trade at $13.59, brushing off Tuesday's $6 price-target cut to $13 from Piper Sandler. FSLY has managed a slight bounce from its May 12, record low of $9.50, adding 7.5% in the last month. However, the equity is still saddled with a 61.6% year-to-date deficit, and there's reason to believe Fastly stock could add to these losses in the near term.

Specifically, FSLY just ran into a historically bearish trendline that pressured the shares lower in the past. According to Schaeffer's Senior Quantitative Analyst Rocky White's latest study, Fastly stock is now within one standard deviation of its 50-day moving average. The delivery name has seen six similar signals over the past three years, and was lower one month later 83% of the time, averaging an 18.6% loss for that period. A comparable move from the stock's current perch would place it just above $11.  

FSLY Chart July 7

A shift in the options pits could also add pressure. Fastly stock's Schaeffer's put/call open interest ratio (SOIR) of 0.40 ranks in the low 11th percentile of annual readings, which indicates a call-bias amongst short-term options traders.

Options look like the ideal avenue to pursue for those looking to speculate on FSLY, as it sports relatively cheap premium. This is per the equity's Schaeffer's Volatility Index (SVI) of 87%, which stands higher than 34% of readings from the past year. What's more, the security's Schaeffer's Volatility Scorecard (SVS) sits at a relatively high 75 out of 100, meaning the shares have exceeded option traders' volatility expectations during the past year.

 

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