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Good morning everyone. Happy Wednesday. It’s time for our chart of the week, and this week we’re gonna be focusing on cloud computing name Datadog; DDOG is the symbol. Let’s take a look at this chart. It had a nice breakout yesterday.

As you can see from the chart up here, it had a beautiful run up here from the middle of November up to an all-time of about $170, and corrected back a good portion of that move. About 65% of that move was corrected through the middle of January. The stock really came down hard in December.

But it looks like it stabilized here at about the $135-140 level. And what was notable was yesterday, on January 27, the stock had a nice big outside day. Now what is an outside day? That is when a stock makes a lower low and higher high from the prior day.

So Friday we had a very, very tiny range – a “dog” on Friday and we also had a “dog” on Thursday of the prior week. But then we expanded out, we opened up lower in Datadog and ran up to that 50 day moving average – you can see it right over here – and pulled back a little but still did close above the key 20 day moving average.

While it would have been nice to see Datadog close at or near the highs from the session, it’s not a tragedy that that happened. In fact, we’re looking for the next couple of days for the stock to start eating into this top part of the range from Monday. This was a high volume day on Monday, so it’s very important for this low to hold if this stock is going to continue moving forward. I think we do have some good opportunities to move upwards.

If we look at the Fibonacci retracement from the top in December to this most recent one, this low, of about $134, we did hit that 38% retracement level yesterday, which is also pretty much in alignment with the 50 day moving average. We have the 50% retracement up to about $151, which is about $9 higher than it is right now. Think that’s pretty achievable here. That’s some good resistance at the $155 level from back in November and December and then also represents a 61.8%.

That would be a really nice move up, about $12-13. It’s about 8-9%. I think it can get a bit further than that if earnings are strong and the rest of the cloud computing group continues to remain strong.

We saw Salesforce was really strong. Workday, ServiceNow, and a couple of others names in the cloud area that represented good strength. It wasn’t only Datadog. It was a bunch of other names too.

The technicals: MACD is starting to turn upwards. We are seeing some negativity though in the money flow. That’s starting to improve. And relative strength is starting to improve too.

A mixed picture on the technicals here, but I do think that the price action and the volume levels that we had earlier in the week speak very well and positive and bullish for Datadog.

Take a look at that one – DDOG.

Video Length: 00:03:18

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