Cash News
Toast Inc (TOST) closed 6.1% lower at $22.71 last session, even after the fintech company’s second-quarter earnings and revenue exceeded estimates. Anytime there’s a top-line beat but the stock moves lower, its worth a closer look under the hood to see if there’s a ‘buy the dip’ opportunity.
The stock is down 13.1% already in August, but could soon stage a bounce after encountering a historically bullish trendline. The stock is within one standard deviation of its 126-day moving average, after trading above it 80% of the time over the past couple months and in eight of the last 10 trading days. Per Schaeffer’s Senior Quantitative Analyst Rocky white, this has occurred four times over the last three years, and Toast stock was higher one month later after three of those instances, averaging a 5.8% gain.
The $22 level has already stepped up as support in April and June. The equity is also drifting into oversold territory, per its 14-Day Relative Strength Index (RSI) of 34.
Meanwhile, there’s ample short squeeze potential amid the drawdown. Short interest has been building, up 26.4% in the last month, and the 34.7 million shares sold short account for 8.9% of the stock’s available float. At TOST’s average pace of trading, it would take shorts over four days to buy back their bearish bets.