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Buy the Earnings Dip in The Trade Desk

The Trade Desk is dipping lower despite strong earnings and a solid outlook. The chart looks good too.

The Trade Desk  (TTD) - Get Trade Desk, Inc. Class A Report has been volatile on Monday after the company reported earnings.

Shares are currently down less than 1%. However, the stock was higher by more than 4% in premarket trading before falling almost 7% in early trading just after the open. 

In other words, this one has been all over the place.

The market tried to sell this stock lower despite pretty strong results. The Trade Desk beat on earnings and revenue results and provided solid guidance, although providing an outlook remains challenging for management due to COVID-19.

Like other growth stocks though, the first reaction from investors seems to be to sell the stock rather than buy it. Roku  (ROKU) - Get Roku, Inc. Class A Report dipped on earnings, as did Twilio  (TWLO) - Get Twilio, Inc. Class A Report despite solid results.

Even some of the other mega-cap tech stocks in the ad industry - like Alphabet  (GOOGL ) - Get Alphabet Inc. Class A Report- have had trouble maintaining post-earnings momentum despite strong results.

After a monstrous rally in the end of 2020, The Trade Desk did not fare too well in the first half of 2021 as the stock ultimately sank 52% amid the growth-stock bear market

With it on the mend now what do the charts look like?

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Trading The Trade Desk Stock

Daily chart of TTD stock.

Daily chart of TTD stock.

I won’t say that The Trade Desk didn’t deserve its big rally into year end, but it was difficult to justify a move from $50 at the start of October to almost $100 in December.

The valuation was out of control, even though the technicals were very bullish at the time.

Shares plunged down back toward the $50 area, ultimately finding this zone as support in May. Since then, it’s been enjoying one large rally after the other.

Most recently, The Trade Desk stock was consolidating at the 10-day moving average ahead of earnings. Following the report, the stock dropped down to the 21-day moving average before recovering its losses (and the 10-day) amid the rebound.

From here, let’s see if The Trade Desk can clear the $85 level, which has been resistance this month and last month. Above that level opens the door to $90 and above $90, the highs are in play at $97.28.

On the downside, let’s keep an eye on Monday’s low. A move below $78 means the stock is failing to hold the 21-day moving average and the 61.8% retracement.

That puts the 200-day, 50-day and 50-week moving averages in play, currently between $72 and $74.