Shopify Inc. (SHOP) shares have risen nearly 10% since the beginning of the week following positive commentary from several analysts. In anticipation of strong fourth quarter earnings on Feb. 15, traders and investors have sent shares sharply higher to retest their all-time highs at around $131.16. Traders may want to keep an eye on the stock given the higher-than-average volatility and the potential for another great quarter.
Wedbush’s Aaron Turner raised his price target on Shopify shares from $120.00 to $140.00 on Monday, citing a long growth runway supported by an underpenetrated total adressable market, multiple growth vectors and high-caliber management. On Tuesday, Roth Capital’s Darren Aftahi raised his price target from $127.00 to $144.00, saying that fourth quarter financial results are likely to be above expectations following positive channel checks. (See also: Shopify Launches Ecommerce Channel for Gaming Companies, Integrates with Apple .)
From a technical standpoint, the stock rebounded from lower trendline support earlier this month to retest its all-time highs at $131.16. The relative strength index (RSI) has risen to slightly overbought levels of 63.67, while the moving average convergence divergence (MACD) appears to be on the verge of a bullish crossover that could signal further upside ahead. With the RSI remaining below 70.0, there is room for a potential breakout from these levels.
Traders should watch for a breakout from prior all-time highs to trendline resistance at $135.00 or R1 resistance at $138.59. A further breakout from these levels could lead to a move toward R2 resistance at $149.25. If the stock fails to break out from its prior highs, traders should watch for a move to support levels at $125.00 or the pivot point at $119.80. A further breakdown could lead shares to trendline support at around $115.00. (For more, check out: Shopify Cuts a Deal With UPS for Its Clients.)
Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.