You Ask, We Analyze: Can Clover Health Provide A Good Bounce Play?

On Sunday evening, Benzinga asked its followers on Twitter to name one ticker you’re buying at the open on Monday. From the replies, Benzinga selected one ticker for technical analysis. @InvestorVenture, and @polymorphglitch are buying Clover Health Investments, Corp CLOV is a good buy.

Clover Health has potential for a short squeeze due to its underlying statistics:

• Relatively Small Float: Clover Health has a small float of just 208.43 million shares.
• High Ownership Levels: 69.08% of Clover Health’s float is held by insiders and institutions with insiders owning 14.38% and institutions an additional 54.70%.
• High Short Interest: Of the 208.43 million share float 30.62 million, meaning 14.69%, are held short. This number is up from 25.26 million in July.

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The Clover Health Chart: Clover Health pon Friday bounced up from a support level near $7.84 and printed a hammer candlestick. A hammer candlestick is found is often found at the bottom of a downtrend and may indicate a reversal to the upside is in the cards.

In Monday's premarket, Clover Health was trading back down toward the support level amid overall market weakness. If the general markets, specifically the SPDR S&P 500 SPY and Nasdaq, reach oversold territory when the market opens, and if Clover Health holds above the $7.84 level, the area could provide an entry for at least a bullish bounce play with a stop loss below the level.

Clover Health’s moving average convergence divergence (MACD) crossed above the signal line on Sept. 13 but fell slightly below it again in the days that followed. When MACD crossed above the signal line, it's a buy signal for technical traders although the pace at which the crossover happens is taken into effect. A faster and steeper cross above the signal line is a more powerful buy signal.

Clover Health is trading below the eight-day and 21-day exponential moving averages with the eight-day EMA trending above the 21-day, both of which are bearish indicators. The stock is also trading below the 200-day simple moving average which indicates overall sentiment in Clover Health is bearish.

• Bulls want to see big bullish volume come into Clover Health to drive the stock up above the eight-day and 21-day EMAs and towards a resistance level at $8.62. If the stock can regain the level as support, it has room to trade up toward $9.09.
• Bears want to see big bearish volume drop Clover Health below the lower support level. If the stock loses the level as support, it could retest the $7.41 area.