Today has seen incredible movement and volatility within the market. Most of it seems to have started yesterday and carried on today. We have seen a 305% from one stock, whilst being up over 1,600% from the day before. We have also seen one stock climb nearly 1500% since yesterdays close. Let’s take a closer look.
Digital World Acquisition Corp (DWAC)
DWAC is a special purpose acquisition company (SPAC). Donald Trump is the chairman of this social media company. The firm is promoting itself as having a large market opportunity in presenting an alternative to what it views as the liberal-minded media establishment.
SPACs had a tremendous run last year, with hundreds of them being listed and many doing well. Although, not as many have held their gains since. Digital World Acquisition Corp listed for $10 a share, similar to most other SPACs. The DWAC stock price opened Thursdays pre-market and quickly rose to $20, before fading back down to $10.32. The stock took off throughout the day and closed at $45.79. Momentum didn’t stop there as the stock closed after-hours trading at $65.50. Traders were unsure wether momentum would continue and many were already looking for sympathy plays (other SPACs and other social media companies, namely DatChat). The question over continued momentum was quickly answered as the stock opened this morning and jumped to $89. Finally, at the opening bell, the stock took off, experiencing multiple halts, and reached a high of $175. We have not seen something like this since AMC and GME in January.
This high was followed by multiple down halts, reaching a low of $67.96. The stock continued to trade between this price and around $115. It closed at a price of $94.20. DWAC traded 500M shares yesterday and 127M today.
Other stock that saw volume related to this was DatChat (DATS). The stock ran from $8.86 to a high of $13.40.
Phunware, Inc. is an Austen, Texas based mobile application, location tracking, blockchain, and advertising software company. It was also released on the market as a SPAC in 2019. The price saw some movement yesterday before close, rising from about $1.05 to a closing price of $1.51. The stock continued momentum through after-hours and pre-market trading. It opened at $7.52 and instantly ran to a high of $24.04. It then experienced numerous down-halts simultaneously to DWAC. PHUN recovered the best though, reaching a low of $5.52 but regaining $11.50 later in the day.
PHUN saw greater volume than DWAC, with 623M shares trading hands over the day. But keep in mind, PHUN was a much cheaper than the DWAC stock price.
PBTS was a stock I wrote about earlier this week, stating that I thought due to the increasing volume, it would see a strong move. We got that move today, as the stock opened at $1.30 and reached a high of $1.93. A lot of selling pressure was seen and the price collapsed back to opening levels. We alerted the stock at $1.04, resulting in a 85% gain.
What to expect?
Well, one thing I would assume we see is volatility and increased volume now. As for continuation of both of these stocks, for us they look risky. A true risk to reward is hard to calculate on such volatility. I would stick to scalping breakouts and bounces off support, or going short at resistances.
What I do think we will see is momentum come back to SPAC companies and also small caps. Seasonally suggest winter is always the best for these two, but the results of today could indicate the certainty of this matter.