On Thursday evening, Benzinga asked its followers on Twitter which stocks they’re focusing on for lotto Friday. From the replies Benzinga selected one ticker for technical analysis. @pejckoo and @AMC2dsMooon are both watching VPC Impact Acquisition Holdings (NASDAQ:VIH), a special purpose acquisition company headquartered in Chicago.
Benzinga also asked what stock people plan to buy at the open on Friday. @BenjamenKelly and @bibisycl both responded they plan to take a position in VPC Impact. The traders are likely positioning for a potential short squeeze.
VPC could be a great short squeeze candidate due to its underlying statistics:
- Small Float: VPC Impact has a very tiny float of 19.24 million shares.
- High Ownership: 69.45% of VPC Impact’s float is locked up with institutions although insiders do not hold any shares.
- High Short Interest: Short sellers have been piling into VPC Impact recently. 7.03 million, which means 39.22% of VPC Impact’s total float is held short. This number has increased from 6.04 million in July.
The VPC Impact Chart: Within the three months following its Nov. 19 2020 Nasdaq debut, VPC Impact went from trading in the $9 range to hit an all-time high of $22.56. Since then, VPC Impact’s stock has plummeted over 55% back to the $9.82 level where it found a bottom.
On Thursday VPC Impact shot up 5% higher and closed the day up 3%. The action allowed VPC Impact to blast through a resistance level at $10.09 but the bulls were unable to push the stock through a higher resistance level at $10.54 and VPC hit the level and wicked from it. In the premarket on Friday, VPC Impact was attempting to bust through the level.
The stock had a much higher than average daily trading volume with 6.38 million shares changing hands compared to the average 10-day volume of just 693,710 shares. High volume on a security indicates there is a high level of interest and on Thursday the volume was bullish.
VPC Impact’s relative strength index (RSI) is measuring in at about 75% which puts it in overbought territory and is a sell signal for technical traders. Eventually, the stock will need to enter into a period of consolidation to cool the RSI.
The stock is trading above the eight-day and 21-day exponential moving averages with the eight-day EMA trending above the 21-day, both of which are bullish indicators. VPC Impact is also trading above the 50-day simple moving average, which indicates longer-term sentiment in the stock has changed to bullish.
- Bulls want to see continued bullish momentum push VPC Impact up over the $10.50 mark. If the stock can regain the level as support, it has room to move up toward $11.37.
- Bears want to see big bearish volume enter the stock to knock it back down under the $10.09 level. If VPC Impact loses the level as support it could fall back down to the $9.82 mark.
- Short squeeze seekers will want to watch for sustained high bullish volume. Eventually, VPC Impact will either consolidate in order to make a slow progressive move higher or the stock will skyrocket through every resistance level and enter into a volume climax scenario. If it’s the latter, VPC Impact is likely to retrace a large percentage of its move quickly.
