Clover Health Stock Reverses Course After Medicare Upgrade: What's Next?

Shares of Clover Health Investments Corp CLOV were trading 7.97% higher at $7.99 Friday afternoon. 

Chamath Palihapitiya, who helped bring the health care company public through a SPAC in June 2020, may have excited investors when he took to Twitter to announce the Centers for Medicare and Medicaid Services upgraded its rating of Clover Health from 3 to 3.5 stars.

Palihapitiya went on to say the upgrade “shows CLOVs ability to execute and validates their wide-open network approach to access a larger TAM compared with narrow-network plans offered by competitors.

“Around 50% of $CLOV's membership who self-identify are those of minority background vs only 34% average for the industry,” added Palihapitiya.

The announcement of the upgrade coincided with a massive uptick in volume on Clover Health and the stock briefly bust through a resistance level at $7.84 before retracing and consolidating slightly lower.

See Also: How to Buy Clover Health Stock

The Clover Health Chart: For technical traders, Clover Health was likely to break up bullishly regardless of the news because the stock had created a triple bottom pattern within a falling channel on the daily chart. The stock created the double bottom pattern between Monday and Wednesday when it tested a support level at $7.07 and bounced.

On Friday, Clover Health opened on top of a support zone at $7.41 and due to the move north was in the process of printing a bullish Marubozu candlestick. If the candlestick formation is recognized, it is likely higher prices will come on Monday.

By midafternoon, over 15 million shares of Clover Health had exchanged hands compared to the 10-day average of 11.87 million. When there is above average volume in a stock, it indicates a high level of investor interest.

Clover Health is trading above the eight-day exponential moving average (EMA) and in line with the 21-day, with the eight-day trending below the 21-day, which leans slightly bearish.

On Friday, Clover Health was attempting to regain the 21-day EMA and the 200-day simple moving average as support. If the stock can close the day above the moving averages, it will give the bulls more confidence going forward.

• Bulls want to see sustained big bullish volume cause Clover Health close the trading day above the $7.84 level. Above the level, there is resistance at $8.20 and $8.62.
• Bears want to see big bearish volume come in and drop the stock back down under the $7.41 zone, which would cause the stock to lose the eight-day EMA as support. Below the levels, there is further support at $7.07.