Shopify (SHOP - Get Report) stock was on the move Tuesday, closing lower by 2.65% at $328.82 on the day. 

The move comes after the company announced it would raise about $603 million in a secondary offering, selling 1.9 million Class A shares at $317.50. This should be little surprise, given both the massive run so far in 2019 and after the company just announced a $450 million acquisition of 6 River Systems.

However, raising capital dilutes shareholders and puts excess supply in the market. As investors know, the stock market is a not-so-simple game of supply and demand.

Given that high-growth stocks like Shopify, The Trade Desk (TTD - Get Report) , Roku (ROKU - Get Report) , Okta (OKTA - Get Report) and others have been under intense selling pressure lately, some may argue that Shopify's timing isn't very good. Others will say that, despite the recent fall, shares are still up 140% this year, and that now is as good a time as any to raise additional funds. 

On the plus side, shares are well off the lows from both the after hours market and the regular trading session.

It leaves investors wondering if this is an opportunity to buy more shares or if it's a warning sign to wait for better prices.

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Trading Shopify Stock

Daily chart of Shopify stock.
Daily chart of Shopify stock.

As you can see on the chart above, Shopify stock has already embarked on a rather lengthy pullback. Shares have fallen almost 20% from $409.61 last month to a current price near $332.

Neither the 20-day or 50-day moving averages or the 23.6% retracement supported SHOP stock on its decline.  

Two things are key now. The first is whether the 100-day moving average -- which also comes into play near the secondary price -- acts as strong support for Shopify stock. The other consideration to note is how SHOP stock handles its overhead moving averages and 23.6% retracement.

Specifically, will the 20-day moving average -- which looks set to cross below the 50-day, indicating bearish momentum in the short term -- act as resistance? Will the 23.6% reject Shopify's rallies?

These are questions traders need answered before safely proceeding with Shopify stock.

If long-term investors want to nibble on Shopify stock at the 100-day, it's hard to argue with that approach. But for a long-term hold, I'm looking for a bigger drop. More ideal would be the 38.2% retracement just below $300 or even the 50% retracement just above $260. Eventually, SHOP stock will need to test the 200-day as well.

If the 100-day fails as support, traders can look for a flush down toward $300. If the 100-day holds, look to see if Shopify can reclaim $340. Above it puts the 50-day moving average in play, and the $380 level above that.

This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.