A leading enterprise software company, Atlassian (NASDAQ:TEAM) — best known for its collaboration and productivity tools like Jira, Confluence and Trello — hasn’t enjoyed the most auspicious start to the year. Since the January opener, TEAM stock is down more than 14%. Nevertheless, the underlying demand profile for the equity is flashing a reversal signal that has gone undetected by mainstream analysts.
On paper, the ramp up in the digital transformation, along with the hybridization of the workplace, raises demand for collaboration tools — perfectly aligning with Atlassian’s core reason for existence. Combined with the company’s own efforts to push aggressive into artificial-intelligence-based automation, Atlassian’s tools are becoming increasingly valuable for modern development environments.
At the same time, the software firm has struggled with widening losses despite robust revenue growth. Also, competitive pressures and market saturation concerns present headwinds against TEAM stock. Finally, President Donald Trump’s trade policies have rattled the broader business community, impacting Atlassian’s perceived growth trajectory.
Understandably, investors are skittish about the new economic paradigm under Trump; hence, the volatility in TEAM stock is understandable. It could also be an opportunity.
At the most elemental level, a publicly traded security moves because investors decided at that moment to be net buyers (rather than not be net buyers). This sounds painfully obvious until one realizes that raw demand — beautiful and binary in nature — represents one of the few empirical absolutes that analysts can categorize, quantify and ultimately project.
Everything else? Fundamental analysis, technical analysis? It’s all interpretive dance or improvisational jazz set to an income statement or a price chart.
In the film Limitless, the plot centers around a super drug that enhances the user’s intelligence dramatically. During a pivotal scene, the main character’s dramatically ramped up cognition allows him to find unique patterns in prices. The idea is spot on but applied to the wrong medium.
The great irony in Limitless is that the Russian loan shark — one of the film’s antagonists — is actually the smart one. Sure, patterns in numbers sounds nice and all until you realize that it’s (literally) a Hollywood-manufactured fantasy. Numbers, particularly stock prices, represent continuous scalar signals: they have no borders, no definitions so by nature, it’s likely impossible to find meaningful patterns in the infinite randomness.
On the other hand, the Russian loan shark lived in a world of discretization, of compliance or consequences. It’s binary, much like demand. It’s either happening or it’s not.
Regarding TEAM stock, it’s the sequence of demand that caught my eye. In the past 10 weeks, TEAM printed a “3-7” sequence: three weeks of upside interspersed with seven weeks of downside, with a negative trajectory across the period. This base pattern has appeared 33 times, resulting in nearly 67% upside probabilities in the following week.
Moreover, when the 3-7 sequence last flashed about three years ago, the bulls responded with two consecutive 6-4 sequences: six weeks of upside, four weeks of downside. Therefore, traders may be looking not just at a near-term pop but a more protracted sentiment reversal.
Over the next 10 weeks, assuming that the positive pathway materializes, TEAM stock may rise toward a median price of nearly $224. On the other hand, the negative pathway implies a median forecast of around $197.
