DOCU's 40-day moving average is historically a bad omen
The shares of DocuSign Inc (NASDAQ:DOCU) are down 3% at $83.62 at last check, as the $90 mark continues to keep a lid on the stock. A massive post-earnings bear gap in early December helped push DOCU to a 58.2% year-over-year deficit, and it's now trading nearly 75% below its Aug. 10, all-time high of $314.76. What's more, DocuSign stock recently came in contact with a historically bearish trendline, which could pressure the equity even lower in the coming weeks.
Specifically, the stock just came within one standard deviation of its 40-day moving average after a lengthy 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 every one of those instances, DOCU moved lower in the ensuing month, averaging a 9.5% loss. From its current perch, a move of similar magnitude would put the security at $75.68.
An unwinding of optimism amongst the brokerage bunch could result in more headwinds for DOCU. While nine analysts rate the security a "hold" or worse, five still consider it a "buy" or better. What's more, the 12-month consensus price target of $116.39 is a hefty 36.8% premium to current levels.
A shift in sentiment from short-term options traders could also put pressure on the shares, as these traders have been call-biased of late. This is per the equity's Schaeffer's put/call volume ratio (SOIR) of 0.90, which sits higher than just 27% of readings from the past year.
Now could be a good opportunity to take advantage of DocuSign stock's next move with options, considering the equity sports a Schaeffer's Volatility Scorecard (SVS) rating of 90 out of a possible 100. This implies DOCU tended to outperform options traders' volatility expectations of late.