This morning the DOW is down 212 points in what was a nasty gap down opening partly in result of news that Donald Trump has tested positive for the coronavirus. Drooping stocks and bad news has damaged the sentiment of traders today, but this morning shares of Nikola Corporation (NASDAQ: NKLA) are up 2.78% as one of the few technology stocks up this morning. It has been a very popular stock with small investors and Robinhood traders even though it has suffered from a deluge of bad news. Take a look at the chart.
Nikola came under SEC investigation and its CEO was forced to resign. The stock attracted masses of buyers in the summer, but those buyers turned into sellers when the stock broke support at $30.00 and plunged. It attracted many short sellers into the stock and according to the latest figures from the Nasdaq there are over 22 million shares short when the stock does an average of 50 million shares of trading in a day. Now it is rallying in what is partly a short covering profit taking rally.
Should you buy the stock? I would say only if you are daytrader, because the stock is going to now face very fierce technical chart resistance below the $30 and will also have difficulty at its 200-day moving average. It is still in a big downtrend and may never in fact get above $30.00.
The stock market is tough right now. The other day I got a sell signal on the S&P 500 as discussed in this video Tuesday.
One bright spot is that gold and silver are starting to firm up against the stock market to create a big golden triangle pattern. This is one reason I made a small cap silver stock my top stock pick for this month. If you are not yet on my free stock trading email update list click here to subscribe.
-Mike
