The WISH stock price is on a three-week losing streak. Furthermore, ContextLogic is down 30% in July. Sadly, for the bulls, this looks set to continue.
ContextLogic Inc (NASDAQ: WISH) rounded off another miserable trading week with an 8% decline on Friday. The WISH stock price closed at $9.23, the lowest daily settlement since the 7th of June.
The poor run of form comes hot on the heels of a 100% rally in June. However, after failing to clear the $15.40 resistance on the 28th of June, WISH reversed course lower.
Unlike many of the stocks favoured by the retail investors that frequent Reddit’s WallStreetBets forum, WISH is not a downtrodden legacy company. Online retailer, ContextLogic was listed on the Nasdaq in December 2020. However, after trading as low as $17.50 at the start of January, the retail army decided ‘they liked the stock’.
An 88% rally ensued, culminating in WISH topping out at $32.85 on the 1st of March. A 77% decline came next, which was reversed from $7.65 at the beginning of last month.
Despite the decline, the stock is once again trending on WSB. Leading me to believe the longs are still in. Coincidentally, GameStop Corp (NYSE: GME) and AMC Entertainment (NYSE: AMC) have also seen a resurgence of posts. This may prove fatal for WISH.
The daily chart shows the clear rejection of the $15.40 horizontal support, which started the recent decline. This should now be considered a key resistance level.
Additionally, considering the price action that followed, the June low at $7.62 is clearly a significant level to watch. Given the negative trajectory, it appears likely this support will soon come into focus.
Furthermore, the fact that ContextLogic is once again a hot topic on Reddit suggests that bulls are becoming frustrated and prone to bailing out.
As I mentioned in my June report, The short interest is relatively low and not really conducive to a short squeeze. Therefore, without a strong catalyst, the path of least resistance is lower. And until the WISH stock price clears $15.20, I see no real reason to buy it.
Not to mention what happens if WISH drops below $7.62. A dip into unchartered territory may be the trigger for forced liquidation, which sends the price materially lower.
For the sake of the bulls, I hope that doesn’t happen. However, my head tells me it’s more than possible.
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