Laura McCandless
1 min read
Software stock Dropbox Inc (NASDAQ:DBX), which was one of our successful top picks in 2024, is down 4.2% in the last three days, pulling back to support at the $28 level. However, a certain trendline popping up on the charts could signal a short-term bounce.
Per Schaeffer's Senior Quantitative Analyst Rocky White, DBX has pulled back to its 50-day moving average. More specifically, the security is within 0.75 of the trendline's 20-day average true range (ATR) after spending at least 80% of the last 10 days and 80% of the last two months above it.
Within these parameters, six other signals occurred in the past three years. DBX was higher one month later 83% of the time after these events, averaging a 4.9% gain. From their current perch at $28.30, a similar move would put the shares right under the $30 level, erasing its losses from the past few days.
Dropbox stock has been popular amongst put traders lately, and an unwinding of this pessimism could provide further tailwinds. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), DBX's 10-day put/call volume ratio of 3.28 and 50-day put/call volume ratio of 1.90 both rank higher than 97% of readings from the past year.
Echoing this sentiment is the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.95, which sits in the 84th percentile of annual readings. This suggests there's been an unusual appetite for bearish bets of late.
