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On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.
Being a contrarian investor and attempting to “buy the dip” in issues that are in well-defined downtrends is very difficult. Sometimes there’s a specific catalyst to instigate a rally and other times it’s just a technical rebound from the issue being oversold.
The latter scenario may be the reason for the rally in Skillz Inc (NYSE: SKLZ), which is the PreMarket Prep Stock Of The Day.
The Company: Skillz is a mobile game development company. Its platform helps developers build multi-million dollar franchises by enabling social competition in their games. One of the investors in the company is the National Football League, which invests in companies through its investment arm called 32 Equity.
Similar to most SPACs, the issue began trading at the $10 level last April. There was favorable price action as potential acquisitions were being targeted. On Sept. 2, Skillz announced it will complete a merger with Flying Eagle Acquisition Corporation, but the buying frenzy didn’t culminate with that or when it began trading as the new entity,
Boosted by large purchases by Cathie Wood’s Ark Investments, the issue caught a relentless bid in November that didn’t peak until February.
See Also: Skillz Makes A Bullish Breakaway And Options Traders Think There’s More Where That Came From
‘Sell The News’: Before the open on Feb. 4, the company announced a multi-year gaming agreement with the NFL. As part of the agreement, the two sports organizations will host a global game developer challenge. Competing developers will have the opportunity to develop an NFL-themed mobile game. The game will be powered by the Skillz esports platform and will have joint marketing support from both the NFL and Skillz.
On that day, the issue rallied from $31.27 to $38.99 and continued on to a new all-time high ($46.30) and an all-time closing high ($43.72) the following day.
Although sales on the first day of news may have been regretted as the issue bolted higher, in respect, they are looking quite good now.
Bear Raid: As the issue began to lose momentum, short sellers began to attack the company. On Tuesday, for the third time in almost a month, Wolfpack Research continued the assault on Skillz intact. The company cited “growth projections from SKLZ and its SPAC sponsor continue to present to investors are entirely unrealistic.”
The issue had been lower in eight of the last 10 sessions, falling from $19.03 to $12.55. Tuesday’s drubbing inflicted the most damage, swooning from $14.11 and closing just off the low for the day at $12.55.
No More Sellers And All Buyers: Following a slightly higher open, the issue matched Tuesday’s low ($12.45), reaching $12.40, and began to rebound. Instead of short sellers and investors looking to purchase shares of the issue into a falling market, they had to be lifting offers.
As of 2:30 p.m. EST, the issue has continued to make new highs for the day, with the current one being $16.51. It should be noted the volume has already surpassed Tuesday’s high volume day, as 50 million shares have changed hands.
Based on the daily charts, the next potential area of resistance could be the $17 area. The reason being, the issue had three consecutive highs from $16.74 to $17.17 from April 12-14.
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