On Thursday evening, Benzinga asked its followers on Twitter what they’re buying at the open on Friday. From the replies, Benzinga selected one ticker for technical analysis.
@dyals_style and @Smith19222 are buying Sundial Growers, Inc SNDL.
Sundial was trading almost 36% higher at one point in the premarket after printing its third-quarter earnings. The Canadian cannabis company reported net earnings of $11.3 million compared to a net loss of $71.4 million for the third quarter the year prior. Sundial’s board of directors also approved a share buyback program to repurchase up to CA$100 million worth of its outstanding common shares.
The big bullish reaction to Sundial’s earnings print could fuel a short squeeze intraday due to the company’s underlying statistics. Although Sundial has a massive 2.06 billion share float 297.23 million shares, meaning 14.43%, are held short. The number has increased from 286.34 million in September.
See Also: 18 Stocks Moving In Friday's Pre-Market Session
The Sundial Chart: Sundial has been trading in a steep downtrend since June 3 after the stock was the target of a short squeeze and shot up over 105% higher over the course of seven trading days. After reaching a high of $1.48 the stock made a months-long series of lower lows and lower highs until reaching an Oct. 6 bottom of 61 cents where it began to trade sideways.
On Thursday, Sundial closed up 6% but was unable to break above a resistance level at the 72-cent mark despite above-average volume. Intraday, 164.15 million shares exchanged hands compared to the average 10-day volume of 106.42 million. When a stock sees above-average volume it indicates there is a high level of trader and investor interest.
If Sundial opens the trading day above the 75-cent level it will print a higher high above the Oct. 21 high-of-day, which would be the first indication the stock may reverse into an uptrend. A higher low will be needed in the future for confirmation, however.
Sundial is trading above the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending above the 21-day, both of which are bullish indicators. The stock is also trading above the 50-day simple moving average, which indicates longer-term sentiment is bullish.
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- Bulls want to see big bullish volume help Sundial to hold its premarket gains and then for the stock to consolidate on lower volume to power up for a move higher.
- Bears want to see big bearish volume enter Sundial’s stock to drop it down to fill the lower gap Sundial will have on the chart.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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