Cloudy Skies Ahead for Nutanix Stock, Signal Says

The cloud stock is staring up at a historically bearish trendline

While one cloud stock soars to new heights, another could be in trouble. The shares of Nutanix Inc (NASDAQ:NTNX) are down 1.4% to trade at $42.36 today, as they consolidate below a key trendline. Unfortunately, staring up at this trendline has had bearish implications for the cloud specialist, if history is any guide.

More specifically, NTNX is now within one standard deviation of its 80-day moving average, after a lengthy stretch below it. There have been five similar run-ups to this moving average in the last three years, after which the stock was lower one month later by 6.4%, on average, per data from Schaeffer's Senior Quantitative Analyst Rocky White, with just one of the returns positive.

From Nutanix stock's current perch, a move lower of similar magnitude would put it around $36 a month from now, and back below its year-to-date breakeven point. And just below here is NTNX's annual low of $32.52 from two months ago, triggered by a post-earnings bear gap.

Bearish options traders have jumped on the security today, with more than 7,700 NTNX puts changing hands, six times the average intraday amount and volume pacing for the 97th percentile. Leading the charge is the weekly 6/7 40-strike put, with the May 41 put not far behind. Both of these positions are being bought-to-open, indicating options traders foresee an imminent pullback for the security.

Regardless of direction, options look to be an ideal vehicle to bet on NTNX, with the security's Schaeffer's Volatility Index (SVI) of 38% ranking in the lowest percentile of its annual range.