STNE: Bull Flag detected on 31 Jul 2026

STNE is forming a bull flag pattern with the stock at 11.43, near resistance at 11.84 and support at 10.36. Structure score of 11.3/15 and breakout score of 12.6/13 indicate a well-defined flag with solid breakout momentum. Volume at 0.77 ratio (2.94M vs 3.80M avg) shows 77% of normal volume, slightly light but manageable. The overall score of 77.9/98 and win probability of 70.34% reflect a quality technical setup. The conservative target sits at 11.81, just above current resistance, suggesting modest but achievable upside from the flagpole structure.

StoneCo reported Q1 2026 revenue of $141.16M (down 31.68% YoY) with diluted EPS of $1.35 (down 25% YoY). On July 15, Bank of America downgraded STNE to Neutral from Buy citing a more challenging backdrop, and on July 23 Jefferies initiated with a Hold rating. However, StoneCo was added to Russell 2000 Value, 2500 Value, and Russell 3000 Value indices effective June 27, which could draw incremental passive fund flows. Q2 2026 earnings are confirmed for August 13, providing a near-term catalyst. Q1 results showed credit quality deterioration with 90+ day NPLs near 7% and provisions rising over 50% QoQ—concerning fundamental headwinds despite the technical setup forming now.

A successful bull flag breakout would see STNE clear the 11.84 resistance with volume above the recent 3.8M average (ideally 4.5M+) to confirm participation. The measured move target of 11.81 is tight against resistance, suggesting buyers need to push through decisively. The invalidation level sits at support of 10.36—a close below this would negate the bullish structure. The 70.34% win probability indicates the pattern has favorable technical odds, but a breakout would likely be range-bound given the modest target and need for confirmation above resistance.

Recent analyst downgrades from Bank of America (Neutral, July 15) and Jefferies initiating with Hold (July 23) signal caution from the street. Q1 2026 showed payments growth disappointing with credit quality worsening sharply—cost of risk at 21.9%, NPLs near 7%, and provisions up 50% QoQ. Elevated Selic rates in Brazil add macro headwinds, especially since 2026 guidance assumed lower year-end rates. RSI at 57.4 is neutral (not overbought), but volume trailing at 77% of average may weaken breakout conviction. Q2 earnings on August 13 could trigger volatility—recent guidance misses and margin compression suggest headline risk is asymmetric to downside.

We scan more than 6,000 NYSE and NASDAQ stocks every trading day and compare each detected pattern against a database of 370,000+ historical detections. Every setup is scored across three dimensions: Structure, Volume, and Breakout Readiness. Win probability is a calibrated estimate of how similar historical setups performed over the following 10 trading days. This is a swing trading tool built for multi-day holds. It is not built or tested for day trading.