Monday.com Plummets 5.5%—Is This a Buying Opportunity or Technical Weakness?

• Shares of Monday.com (MNDY) cratered 5.5% to $284.52, hitting an intraday low of $284.48
• Institutional buying surged as China Universal Asset Management added 5.4% to its stake
• Sector peers like Microsoft (MSFT) rose 0.4%, contrasting MNDY's sharp decline
• Analysts remain divided: consensus 'Outperform' rating clashes with technical sell signals from pivot points and volume shifts

Friday’s session marks a pivotal moment for MNDY, with traders weighing conflicting fundamentals against volatile price action amid shifting institutional sentiment and technical breakdowns.

Downgrade Pressure and Technical Breakdown Fuel the Slide
The sell-off stems from a Wall Street downgrade to 'Hold/Accumulate' following Thursday’s 2.7% drop, coupled with a critical technical breakdown below key support. Pivot analysis highlighted a bearish 'shooting star' candle on June 30—now validated as resistance—triggering a 4.23% decline. Volume surged on falling prices, a classic 'distribution day' warning, while institutional buying failed to offset the technical damage. Analysts cite overhang from recent volatility (±7% daily swings) eroding short-term conviction despite a 21.3% upside to consensus $351.53 price targets.

Technical Contradictions Create Options Trading Opportunities
• Technicals: 200-day MA @ $274.62 (support pivot), RSI 58.53 (neutral), Bollinger Bands signal oversold (price near lower band @ $279.25)
• MACD histogram -0.0496 (bearish crossover ongoing), 30-day resistance @ $305.02 (next bearish target)

Aggressive traders should focus on MNDY20250718C290 (strike $290) and MNDY20250718C300 (strike $300):
- C290: Delta 0.407 (moderate bullish exposure), Gamma 0.0219 (price-sensitive), Theta -1.033 (time decay advantage). With 15 contracts traded and $10,188 turnover, this call offers 56.99% leverage into $290 resistance. A break above $302.07 could trigger a 20% premium jump.
- C300: Delta 0.235 (defensive bullish stance), Gamma 0.0161 (stable), Theta -0.715. Despite -83.25% price decline, its $38,737 turnover and 45.09% IV make it a high-conviction bet for a rebound to 200-day MA-derived targets.

Action Alert: Short-term traders should sell C290 if $285.26 support fails (stop-loss @ $284.44). Bullish investors can layer C300 positions below $290, targeting $324.49 swing highs. Avoid naked puts—implied volatility spikes (42.03-45.09%) favor long gamma strategies.

Backtest monday.com Stock Performance
The iShares Core S&P Mid-Cap ETF (MNDY) has historically shown resilience following a -6% intraday plunge. The backtest data reveals favorable short-to-medium-term performance, with win rates and returns that indicate a strong recovery period:1. Frequency and Win Rates: The event occurred 485 times over the past five years. The 3-day win rate is 52.16%, the 10-day win rate is 53.20%, and the 30-day win rate is 54.85%. This suggests that MNDY tends to rebound after a significant drop.2. Returns: The average 3-day return following the event is 0.81%, with a maximum return of 6.22% on day 58. The 10-day return is 1.95%, with a maximum return of 7.43% on day 63. The 30-day return is 3.81%, with a maximum return of 11.76% on day 88.3. Maximum Returns: The data indicates that MNDY can experience substantial gains in the weeks following a -6% intraday plunge, with the peak return occurring later in the 30-day period.In conclusion, while there is some volatility immediately following the -6% drop, MNDY has a strong tendency to recover and even exceed its previous levels in the following weeks.

Hold for Now—Watch for $289.49 Break or MSFT Leadership
Monday.com’s technicals paint a mixed picture: institutional accumulation contrasts with short-term overhang, while sector leader Microsoft’s resilience highlights divergent momentum. Investors should brace for further downside if the $289.49 stop-loss level collapses—a breach could trigger a 3.9% selloff toward $274.62. Conversely, a close above $302.07 resistance would invalidate bearish scenarios, reigniting the 21.5% rally toward $351.53 targets. For now, wait for confirmation: only a sustained breakout above $305.02 or institutional buying surge above 60% of average volume justifies reclassification to 'Buy' status.