Ocado share price is under pressure as the global tech sell-off accelerates. The stock has moved to a bear territory since it has dropped by 30% from its highest level this year.
The background: Ocado is a fast-growing technology company that offers e-commerce solutions. In the UK, the firm has partnered with Marks and Spencer to power its online shop. Internationally, it has partnered with other retailers like Kroger to help them ship groceries easily. It achieves this by building large automated warehouses.
Ocado has been a major beneficiary of the pandemic because the stay-at-home orders have made more people boost their online spending. Indeed, in the past 12 months, the stock has almost doubled.
Tech sell-off: The Ocado share price has dropped sharply in the past few weeks as investors word about whether it can sustain its growth as UK vaccinations increase. Also, recently, the stock has dropped mostly because of the overall weakness in the tech sector.
As I wrote earlier today, the tech-heavy Nasdaq 100 index has dropped by more than 10% from its highest point this year. This performance is because of the strong performance of bond yields.
Ocado share price outlook
The daily chart below shows that the Ocado stock did something important this week. It moved below 2,137p. Which was an important support level or the neckline of the double-top pattern that formed between September and February. Most importantly, the 25-day and 50-day moving averages have made a bearish crossover.
Therefore, I believe that the stock weakness will continue in the near term. If this happens, bears could target 1,355p level, which is about 36% below the current level. However, a climb above 2,400p will invalidate this trend.
Ocado stock chart