One tech stock is up 240 percent in a year, but chart analyst calls it a FOMO rally

One cloud tech stock has risen further and faster than all the rest.

Twilio has surged more than 200 percent in 12 months, miles ahead of double-digit gains by Adobe, Workday and Salesforce.

Blue Line Futures' Bill Baruch says it might be too late to jump into the stock now.

"Don't simply chase this stock because of FOMO [fear of missing out]. I'd rather miss a move than chase something," Baruch said on CNBC's "Trading Nation" on Wednesday. "Yes, Twilio is strong. It broke out above a potential 'butting bearish wedge' and that breakout level is going to be support above that trend line. Still, though, I wouldn't chase this."

On top of its 12-month surge, the stock has risen 18 percent just this year and reached record highs as recently as this week. A "butting bearish wedge" is formed when a trading range narrows as prices rise — Twilio broke out of this bearish channel earlier this year.

Instead of getting in now, Baruch is waiting for the cloud software stock to come back down to a more attractive entry point.

"It is out above the 50-day, 100-day, 200-day moving averages, but I'd wait for a little bit of a pullback coming into there. Look at a retracement," said Baruch. Around "$85 or $90 – that's where you're going to find value in the stock rather than just chasing it."

The bottom end of that range at $85 represents a 21 percent drop from Wednesday's close of $106.87. Twilio first broke above that level last September.

Stacey Gilbert, head of derivative strategy at Susquehanna, says the stock is likely to continue its upward sprint based on market activity.

"Options are the market's best guess of where the stock is going to be in the future, it's the positioning of the future, and that remains bullish," Gilbert said on "Trading Nation" on Wednesday. "So while the stock may be pulling back a little bit [on Wednesday] as a knee-jerk reaction and some profit-taking, I'd make an argument that the sentiment overall remains bullish."

Twilio fell 7 percent on Wednesday after topping fourth-quarter earnings estimates, but falling short on first-quarter guidance.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's Closing Bell (M-F, 3PM-5PM ET). In addition, he contributes to CNBC and CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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