PreMarket Prep Stock Of The Day: Carver Bancorp

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.

While many issues in the financial sector were not participating in Wednesday's rally, one issue in the sector is having a good day. That issue is Carver Bancorp Inc CARV, the PreMarket Prep Stock of the Day.

The Company: Carver Bancorp is a holding company and conducts its business as a unitary savings and loan holding firm, and the business of the company consists of the operation of its subsidiary.

Longtime Loser: Anyway you look at it, on a relative performance basis this stock is a “pig.”

Throughout its dreadful price history it has undergone a number of reverse stock-splits, which are usually a bad thing for a company in the long-term. As a result of the the splits, its all-time high was made in December 2003 at $397.50.

its most recent reverse split was on June 15, a 1-for-15 split of its shares. The issue is now lower than the close from that day, which was $15.18, to illustrate the negative effect of the split at least in the short-term.

The Reasons For Carver Bancorp's Sudden Rallies: Not to oversimplify the price action in the issue, but for the most part, it is a short squeeze target.

As of Tuesday, the issue had a high short interest of 68%, but not such a high short interest ratio (days to cover of .7). Regardless, the high percentage makes its subject to squeezes.

Being a Black-owned business, the issue has attracted investor interest around the Juneteenth holiday. 

Along these lines, the issue spiked to $19.21, its highest level since last June, when it spiked to $22.97 in the week preceding the holiday this year.

Recent Carver Bancorp Price Action: On June 28, on a short squeeze, Carver Bancorp spiked to $14.50 and retreated to end the session at $12.70.

On Tuesday, it was closing in on its June 22 low but found buyers at $9.74 and moved from there to close $9.80.

It was the issue's lowest-volume day since June 23 (174,000) and traded 417,000, while its five-day average volume is 1.43 million.

Lack Of Sellers: With the issue posting its lowest close since June 2 ($9.90) on very low volume and lack of follow-through beyond Tuesday’s low, the combination of short sellers trying to cover and aggressive buyers instigated a rally.

As of 2:30 p.m. EST, the price action had followed the prior script. The rally off the open ended before 1 p.m.,when it peaked at $12.63 and reversed course. That high coincided with its June 28 close of $12.70.

Since making that intraday high, it has drifted lower. The stock ended Wednesday's session higher by 7.96% at $10.58.