You Ask, We Analyze: Vinco Ventures Stages Massive Short Squeeze

On Sunday evening, Benzinga asked its followers on Twitter which stocks they’re focusing on for the week. From the replies Benzinga selected one ticker for technical analysis.

@stock_doctor and @BlakeMa06499663 are both watching Vinco Ventures, Inc BBIG. @stock_doctor commented Vinco Ventures could potentially behave similarly to how Support.com did last week. On Friday, Support.com was the target of a short squeeze and skyrocketed over 200% higher before slamming into a resistance level near the $60 mark.

Like Support.com, Vinco Ventures fits the bill of a short squeeze candidate. Traders may remember the stock was successfully targeted in January when GameStop Corporation GME and AMC Entertainment Holdings, Inc AMC short sellers were smoked:

• Vinco Ventures has a small float of just 40 million shares and 11.67 million, meaning 21.06%, of the float is held short. The number has increased from 7.82 million in July. There had been some confusion on Vinco's float; the company confirmed to Benzinga the 40-million share data.

See Also: EXCLUSIVE: Vinco Ventures Merger Partner ZASH Global Media Is Building Content, Gearing Up For Merger

The Vinco Ventures Chart: Vinco Ventures was up over 90%, at one point, in Monday's premarket session. The stock also had a big bullish day on Friday closed up 80% higher at $5.30.

High trading volume was indicative a move higher could be in the cards. 238.32 million shares changed hands Friday compared to the average 10-day volume of 49.8 million. Volume demonstrates the level of interest in a security and high volume often precedes a larger price swing.

Vinco Ventures also broke up from a descending channel last week (Wednesday) the stock had been trading in since June 10. Vinco Ventures then backtested the channel as support on Thursday and on Friday created a breakaway gap up over a support and resistance level at $3.06.

Vinco Ventures will likely gap up again, which will create a runaway gap pattern driven by intense investor interest. It's possible during a short squeeze for a stock to make a series of runaway gaps but at some point, sellers will come in and Vinco Ventures is likely to fall sharply.

Vinco Ventures relative strength index (RSI) measured in at about 74% on Friday, which is overbought territory. An RSI above the 70% level is a sell signal for technical traders. When Vinco Venture’s RSI reached 78% on June 9 the stock fell over 40% over the following six trading days to cool the RSI down to a much more comfortable 52%.

• Bulls looking to play momentum should watch for continued high volume on lower timeframes and be aware that either consolidation or a big move lower will eventually come. Above $7.40 Vinco Ventures has resistance at $8.90 and above that there is not much resistance until the stock’s previous all-time high at $11.63.
• Bears should watch for high selling volume to eventually enter Vinco Ventures’ stock. There is support below at $6.08, $5.01 and $4.21.

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