Is This The Calm Before The Storm For Upstart's Stock?

Upstart Holdings, Inc. UPST made a new all-time high of $191.89 on June 4 and then plummeted 40% over the following eight trading days.

Although still trading 370% above its initial public offering price of $26, the AI lending company has caught the eye of a number of Reddit communities due to its underlying statistics:

• Small Float: Upstart has a very small float at just 45.63 million shares. When a stock has a small float its stock price can rapidly rise or fall because supply and demand levels can shift quickly.
• High Ownership Levels: 76.38% of Upstart’s float is held by insiders and institutions with 20.13% held by insiders and another 56.25% held by institutions.
• High Short Interest: 10.16 million, or 19.73% of Upstart’s total float is held short. It is also notable that the amount of short interest has almost doubled from last month when just 5.28 million shares of the company were held short.

Upstart’s statistics indicate an increased risk of volatility but for the past 12 trading days, the stock price has barely moved. This may be set to change.

The Upstart Chart: Upstart has been trading sideways since June 14, between a support level at $120.30 and a resistance level at $135.18. Decreasing volume on the daily chart has caused Upstart’s stock to fluctuate less each day and on Tuesday its range tightened to only $5.

Decreasing volume is often followed by a big burst of volume that breaks a stock up or down from a range. This may be in the cards for Upstart’s stock and due to its small float, it could move quickly in either direction depending on whether the bulls or the bears take control.

Upstart has lost support of both the eight-day and 21-day exponential moving averages and the eight-day EMA is trending below the 21-day EMA, all of which indicate short term sentiment is bearish. The eight-day and 21-day EMAs are starting to come closer together, however, which means a small pop upwards would allow Upstart to regain the EMAs as support.

The stock is trading about 7% below the 20-day simple moving average and bulls would want to see Upstart regain that level as support.

Bulls would also like to see bullish volume come in and push Upstart up over resistance at the $128.30. If it could regain that area as support, it has room to move up to $135.18.

Bears want to see bearish volume come in and push Upstart’s stock down under the $120.30 level. If the stock loses the area as support, it could revisit $114.20.

UPST Price Action: Upstart trades around $121.80 at publication time.