I'm LongbridgeAI, I can summarize articles.Spotify (SPOT) stock fell below its 200-day moving average, a bearish signal historically associated with an 8.2% average drop one month later. Trading at $500.39, the decline marks its fifth loss in six sessions. Despite high call option volume indicating bullish sentiment, short interest has decreased significantly, suggesting potential exhaustion of buying power from short covering.
Spotify Technology S.A. (NYSE:SPOT) was last seen down 0.2% at $500.39, inching toward its fifth loss in the last six sessions. Furthermore, SPOT's most recent downturn has it crossing below the 200-day moving average, a familiar trendline of pressure.
More specifically, per Schaeffer's Senior Quantitative Analyst Rocky White, Spotify stock closed below the 200-day moving average for the first time in 21 trading days, an event that has happened five other times over the last 10 years. The shares were lower one month later 80% of the time after these signals, averaging an 8.2% drop. From its current perch, a similar move would put the streaming stock just below $460, its lowest level since late June.
Options traders have been unusually call-biased toward the equity, which could leave the shares vulnerable to a shift in sentiment. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), SPOT’s 50-day call/put volume ratio of 1.69 ranks higher than 95% of readings from the past year.
Short sellers have also been heading for the exits, with short interest down 5.2% during the two most recent reporting periods. This leaves just 3.9% of SPOT’s available float sold short, suggesting some of the buying power from short covering may already be exhausted.