Fastly: Mind the Gap in High-Flying Tech Stock

Fastly had one of the sharpest rallies in big tech stocks, ripping about 400 percent between early May and early August. But the price action has turned bearish in the last month.

FSLY posted strong quarterly results on August 5, but investors “sold the news.” Management added fuel to the fire by revealing a large dependence on TikTok, the Chinese social-media company that’s become a hot potato between Washington and Beijing.

The drop produced a bearish gap that FSLY tested last week but wasn’t able to fill. The resulting lower high is within 3 percent of an earlier peak on July 9. That creates a potential bearish head and shoulders pattern.

Finally, FSLY’s lower high last month contrasts with the broader Nasdaq-100 and Technology sector, which both made new highs yesterday. (Lack of relative strength.) All those patterns suggest the tide may be turning against FSLY.