Intuit (INTU) Plummets 6.88%: What's Behind the Sudden Selloff?

Summary
• Intuit (INTU) trades at $563.62, down 6.88% intraday
• Intraday range: $563.06 (low) to $592.66 (high)
• Down 14% year-to-date and 29.44% from 52-week high
• Sector leader Adobe (ADBE) declines 1.88%

Intuit's sharp selloff has captured market attention as the stock trades near its lowest level since April 2025. The decline follows a string of negative catalysts including a four-day losing streak, a 14% monthly drop, and concerns over valuation sustainability. With technical indicators flashing bearish signals and options activity intensifying, investors are scrambling to decipher the next move in this high-stakes trade.

Earnings Optimism Crumbles Amid Valuation Concerns
The selloff reflects a perfect storm of factors: a 14% year-to-date decline has eroded investor confidence, while recent news highlights a 29.44% pullback from its July 2025 all-time high. The stock's four-day losing streak - the longest since January 2026 - has triggered stop-loss cascades. Analysts are now questioning whether the recent earnings beat and AI partnership optimism can justify the current $605.28 price tag, especially as the stock trades at 87.9x dynamic P/E, well above its sector average. The recent partnership with BDO Canada, while strategic, has failed to offset broader concerns about slowing AI-driven growth momentum.

Software Sector Weakness Amplifies INTU's Pain
The Application Software sector is under pressure, with Adobe (ADBE) down 1.88% despite its dominant position in creative tools. The sector's 41.06x P/E ratio remains elevated compared to the S&P 500's 27.4x, creating a challenging environment for high-growth names like Intuit. While Adobe's recent AI integrations have shown promise, the broader sector's struggles with margin compression and competitive threats are weighing on investor sentiment. Intuit's 21.2% profit margin, while strong, now appears less compelling against this backdrop of sector-wide caution.

Bearish Positioning and Volatility Playbook
• 200-day MA: $683.50 (well above current price)
• RSI: 21.18 (oversold territory)
• MACD: -7.86 (bearish divergence)
• Bollinger Bands: $618.27 (lower) to $695.14 (upper)
• Support/Resistance: 30D $646.62 / 200D $659.93

Technical indicators suggest a continuation of the downtrend, with the 52-week low at $532.65 becoming a critical watchpoint. The RSI's oversold reading may not provide immediate relief given the sector's structural challenges. For options traders, the INTU20260123C550 and INTU20260123C560 call options offer compelling bearish exposure. The 550-strike call (IV 38.48%, leverage 26.33%, delta 0.65) and 560-strike call (IV 37.29%, leverage 37.01%, delta 0.54) both show strong liquidity (turnover 2,135 and 12,152) and favorable time decay (theta -1.83 and -1.68). In a 5% downside scenario to $535.44, the 550-call would expire worthless while the 560-call would see a 28% price drop. Aggressive bears should consider shorting the 550-call as a high-leverage play, while more conservative traders might use the 560-call for defined risk exposure.

Backtest Intuit Stock Performance
The backtest of Intel's (INTU) performance after an intraday plunge of -7% from 2022 to the present shows favorable short-to-medium-term gains. The 3-Day win rate is 54.51%, the 10-Day win rate is 51.57%, and the 30-Day win rate is 57.23%, indicating a higher probability of positive returns in the immediate aftermath of the plunge. The maximum return during the backtest was 3.23%, suggesting that while the stock has shown resilience, its performance is generally modest.

Critical Crossroads: Hold or Halt?
Intuit's selloff shows no immediate signs of abating, with technical indicators and sector dynamics aligning against a near-term rebound. The 52-week low at $532.65 represents a critical psychological barrier that, if broken, could trigger further institutional selling. While the stock's AI-driven growth narrative remains intact, the current valuation appears stretched given the 14% monthly decline. Investors should closely monitor Adobe's (-1.88%) performance as a sector barometer. For now, the prudent approach is to avoid new long positions and consider short-term bearish options strategies. Watch for a decisive break below $560 to confirm the continuation of this bearish trend.