PreMarket Prep Stock Of The Day: Marathon Patent Group

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

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.

When Bitcoin had its initial rally back in late 2017, it carried several issues along for the ride. One of those issues was Marathon Patent Group MARA, which is the PreMarket Prep Stock Of The Day.

The Company: Marathon Patent Group focuses on mining digital assets. It owns cryptocurrency mining machines and a data center to mine digital assets. The company operates in the digital currency blockchain segment and its cryptocurrency machines are located in Canada.

Late 2017 Price Action: After ending October 2017 at $6.16, just as the Bitcoin boom was gaining momentum, Marathon Patent Group was ramping up for liftoff. At that time, just about any issue that had “blockchain” in its description was the toast of Wall Street.

The issue ended the Nov. 22, 2017 session at $8.72 and the rally was just getting started. Two days later it rallied to $40.12 and retreated to end the session at $26.04.

In volatile trading over the next few weeks, it traded down to $14.56 but managed to rally back to $28.12 on Dec. 12 before it was lights out.

The Death March And Rebound: The road to zero for the company was halted in March at $0.35 and had rallied to as high $5.25 in August, but fell back to end October at $2.16. While Bitcoin broke over $10,000 in August and kept going, buyers were cautious of Marathon.

When the Bitcoin rally began to really accelerate in mid-November and December, the issue began to participate. It nearly tripled in November, from $2.16 to $6.28, and doubled from there in December, when it peaked at $14.86 and retreated to end the year at $10.44.

Moving Forward On Fundamentals: Obviously the late 2017 rally was an anomaly and the issue may never see those levels ever again and for good reason. The company has only a handful of profitable quarters over the last few years and has posted an EPS loss in each of the last 17 quarters.

The revenue side is not much better. It had a revenue peak of $34.35 million in Q2 of 2015 but made only $835,000 in its last quarter. In fact, it has not posted a quarter of revenue over $1 million since that outlier in 2015.

It did have some positive news before today's open, that it was teaming up with Digital Blockchain Solutions to form Digital Currency Minders Of North America (DCMNA) to create a better mining environment for North American miners.

Moving Forward With Technicals: So far being only two sessions into the year, the issue looks good from a technical standpoint. On Monday and Tuesday, it found buyers just above its year-end close ($10.44) at $10.53 and $20.69, respectively. It has more than distanced itself from those lows as it's currently trading in the $13 handle.

Therefore investors wanting to go long the issue may have to pick an entry point considerably above its current support. It's also poised to post its highest close since January 2018, if it can end the session above its Dec. 28 close ($12.25).

For another major leg higher, the issue would need to clear its Dec. 28 high ($14.66). Keep in mind the Bitcoin rally does not appear to want to retreat from its lofty levels.