Shopify Inc. - (SHOP.TO) - October 3, 2023
Between October of 2022 and May of 2023, Shopify (SHOP.TO) climbed all the way up the rankings in the SIA S&P/TSX 60 Index Report from dead last to top spot. Since July, Shopify has been losing relative ground, dropping out of the green zone and returning to the Red Unfavored Zone for the first time since March. Yesterday Shopify finished in 32nd place, down 28 spots in the last month.
The Green Favored Zone of the SIA S&P/TSX 60 Index Report features several potential replacement candidates. On the technology side, there is Constellation Software* (CSU.TO) in Computer Software, and CGI Group (GIB.A.TO) in the Internet sector. Replacement retailers are more on the defensive side, including Dollarama* (DOL.TO) and Alimentation Couche-Tard* (ATD.B.TO). Shopify (SHOP.TO) shares appear to be at a potentially significant technical turning point. Starting in May, the shares started to encounter resistance in the $90.00-$92.50 area. In August, a downturn snapped an uptrend and established support in the $67.50 to $70.00 area.
Following a retest of $90.00 resistance, a September downswing brought the shares back down toward $70.00 support, which has held so far. At the moment, it appears that a sideways trend has emerged. A breakdown below $68.00, however, would signal the start of a new downtrend with next potential support levels down near $60.00 or $54.00.
* Shares of Constellation Software, Dollarama, and Alimentation Couche-Tard are held in portfolios managed by SIA Wealth Management.
A recovery trend in Shopify (SHOP.TO) which played out between October of 2022 and August appears to have reversed course. About a month ago, SHOP.TO ran into resistance in the $90.00 to $92.50 area, similar to its April 2022 highs. Following an initial August correction, the shares attempted a rebound last month which faltered near $90.00 again, confirming resistance near there.
October has kicked off with a bearish Double Bottom breakdown confirming distribution and the start of a new downtrend. Initial downside support appears near $67.25 based on a horizontal count, then $54.10 based on a retest of a prior column low and an uptrend line. Initial resistance on a rebound appears near $76.75 based on a 3-box reversal.
With a bearish SMAX score of 1, SHOP.TO is exhibiting weakness against the asset classes.
Disclaimer: SIACharts Inc. specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investors investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIACharts Inc. nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.