Datadog (DDOG) to join S&P 500, Shares Up +9%

Datadog (DDOG) is on the move to the upside after news that it will join the S&P 500 (SPX), with shares up more than 9% in the premarket. The observability and security software company will become part of the index on July 9 and will replace Juniper Networks (JNPR), which is being acquired by HP Enterprise (HPE). Inclusion in a major equity index like the SPX is important because it can have many benefits for a company, such as greater institutional investing inflows, increased liquidity, greater visibility and attention for the company, and greater prestige, among other factors.

DDOG bulls have seen a strong rally in recent months, with shares rising about +66% as of yesterday’s close of 135.01 after hitting 52-week lows of 81.63 during the tariff announcements that roiled markets in April. Price closed near a repeated high/low point around 135 yesterday, which also lined up with the yearly +1 Standard Deviation Channel and marked a potential resistance area. But today’s premarket price would suggest an opening far beyond that threshold and would put price near the February’s downward earnings gap that began at 144.20. This area also represents a volume node, so this could be an important supportive area for the bulls to hold. Candle pattern followers also may have noticed that yesterday’s price action formed a bullish engulfing candle, in which the previous day’s smaller red candle was swallowed up by yesterday’s larger green candle. However, the next phase for this pattern would need further bullish follow through today. 

In terms of other levels to watch, additional resistance could be found at the yearly +2 Standard Deviation Channel near 152 as of yesterday’s close. This area also lines up with another volume node as well as an old high price spike from Jan. 28, which gives additional weight to this area. For other areas of potential support beyond the previously mentioned 135 area, the region from about 116 to 120 shows a heavy confluence of technicals. This includes the yearly Linear Regression Line, the 63-day and 252-day Exponential Moving Averages, the yearly Volume Profile Point of Control, and several times where past price action hit a ceiling around this point before the eventual breakout.