The company reported its fiscal first-quarter results on Thursday after the close of trading. DocuSign’s bottom-line results beat expectations, as did revenue, the latter of which grew 58% year over year.
It helps that management’s revenue outlook for next quarter and the full year also topped consensus expectations.
One analyst even called the quarter “another home run,” and judging by the stock’s reaction that seems about right.
The stock’s post-earnings rally on strong results is a positive sign. It wasn’t long ago that stocks like Twilio (TWLO) - Get Report, Pinterest (PINS) - Get Report and others were being sold despite strong results.
That’s as growth stocks were entangled in a painful bear market. Hopefully we’re seeing a turning point in that regard. For DocuSign, let’s look at the charts.
While many investors considered DocuSign's rally as overheated last year, just look at the past 12 months.
Shares have surpassed $275 twice, but for the most part we’ve seen the stock consolidating for almost a year now. Albeit, this consolidation has taken place in a fairly wide range, but it hasn’t really gone anywhere since July 2020.
In fact, with the post-earnings rally, DocuSign stock is roughly flat over the past 11 months.
After several tests - and one temporary break - of range support at $185, DocuSign is trying to gain some upside momentum. With Friday’s rally, shares are reclaiming the 10-day and 50-day moving averages. It’s also breaking out over downtrend resistance (blue line).
However, the stock’s clearly pausing at the 200-day moving average. In the short term, this moving average could be a big deciding factor in the stock’s direction.
If it’s resistance, I want to see the 50-day moving average hold as support on a dip. That will at least keep DocuSign above $200 and working in the right direction. It will also allow for a future test of the 200-day moving average.
On the upside, let’s see if the stock can clear the 200-day moving average. If it can, $233 resistance is in play. Above that and the $250 to $255 zone is on the table.
The bottom line is pretty simple with this one: Watch the 200-day moving average. It’s either going to give the green light or the red light with DocuSign. At least in the short term.