The Clover Health stock price has spent the last month with a single-digit valuation. But can tomorrow’s earnings finally fire up a CLOV rally?
Clover health Investments Corp (NASDAQ: CLOV) had its best trading day for six weeks yesterday, gaining 9.17% to $8.81.
CLOV has been no stranger to volatility this year. The medicare insurance company, which came to market in a $3.7 billion SPAC deal with Social Capital, has seen its value swing wildly over the last 9 months.
The stock was an early favourite of the wallstreetbets investing forum and started 2021 on the back of a 68% rally in December 2020.
However, by the 5th of March, CLOV had dropped 64% to an all-time low of just $6.31. But the story didn’t end there.
In June, the popular meme-stocks, including GameStop and AMC, roared back to life, taking the Clover health stock price along with the ride.
Between the 1st and the 19th of June, CLOV surged 280% to a record price of $28.85. However, the rally didn’t last long. After setting the ATH high on the 19th, Clover reversed sharply lower, finishing the day 40% off the high, at $16.92.
And in the two months that followed, the stock has bled lower, resulting in the price spending the last month below $10.00.
Although, yesterday’s jump suggests that longs expect Clover to impress at the upcoming second-quarter earnings call on the 11th of August. An upbeat trading update could certainly resuscitate the stock price, especially considering that 21% of the available float is lent to short-sellers.
The daily price chart shows CLOV has been trending sideways between $7.67 and $9.50 for the last month. The 100-day moving average has capped the upper end of this channel at $9.36. This becomes the first resistance level.
The 100 DMA is followed by the tightly bunched 50 and 200-day averages at $10.61 and $10.46, respectively. On that basis, a close above $10.61 would be encouraging for the longs. This would target the 24th of June high at $15.10.
If Wednesday’s numbers disappoint, support is found at $7.67. Should the Clover health stock price slide below, the obvious target becomes the all-time low at $6.31.
Ahead of the earnings, giving a price prediction is risky. Although considering the short positioning, the upside certainly gives investors more bang for their buck.
In saying that, we can’t be sure which scenario plays until this week’s data release. However, I can be sure that volatility is likely to return to CLOV this week.
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