Don't Bet on a Bounce for Snowflake Stock Just Yet

The stock just ran up to a historically bearish trendline

Deputy Editor
Jul 9, 2024 at 3:44 PM
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Shares of Snowflake Inc (NYSE:SNOW) are dropping alongside the rest of the cloud sector today, down 2.9% at $137.46 at last glance. The stock just bounced off its June 25, 52-week low of $122.60, but is now seeing pressure from the 50-day moving average. 

Per Schaeffer's Senior Quantitative Analyst Rocky White, the 50-day trendline is historically bearish for SNOW. In the past three years, the equity has come within one standard deviation of this moving average at least seven times, defined for this study as having traded south of it 80% of the time in the past two months, and in eight of the past 10 trading days. SNOW fell one month after 86% of those occurrences, averaging a 9.5% drop. 

SNOW July9

A similar move from its current perch would put the cloud stock just above $123, and much closer to its recent low. What's more, it would extend SNOW's 31% year-to-date deficit. 

It's worth noting that SNOW's 14-day relative strength index (RSI) of 67.9 is nearing "overbought" territory, despite this recent underperformance. In addition, shorts are continuously building their positions, and show no signs of slowing. 

 

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