DJT was exceptional last week: Up over 50% on 200M share trading volume. The stock is now well above its $12.50 low, the $15 major barrier, and the $17.50 January starting point. It has now returned to its previous $25 downside barrier.
This exciting run-up has produced optimistic media reports and visions of further gains. However, all stocks are notorious for making contrarian moves. Just think back three weeks ago, when DJT’s fall to $12.50 produced pessimistic media reports and fears of further losses.
Note: My previous article, “Unlocked Trump Media Stock (DJT) – Initial Trading Analysis” (Sept. 29), explains the first six days’ activity following the unlocking of all DJT shares.
So, what’s next?
Certainly, the rise could continue. There are plenty of speculators willing to jump aboard an uptrend. Also, for those newly unlocked shareholders who did not sell, this rise has been a welcome event. It may have convinced some that holding on further is a smart strategy.
Here is the daily graph with both the short-term and long-term views.
And here is the 30-minute graph that shows the stock’s intraday movements
But then there are the short sellers. After the September 20 unlocking of all shares and the fast drop to $12.50, it looks like most short sellers nevertheless did not buy and cover their positions. As of September 30, DJT short interest was still high at 11.4M shares, down only 3.1M shares from mid-September’s 14.5M shares. Because that high number was not reported until after the stock market closed on Wednesday, October 9, it may have fostered some of last week’s high-volume jumps – by both short covering buys and speculator buys.
Note: Short interest reports occur twice a month, with each report being issued about ten days after the data-gathering date. The next report, showing the short interest on October 15, will be issued after the market closes on October 24. That figure will show how much the short-covering contributed to DJT’s rise.
Here is the short-interest history alongside the stock price movements
Speculators and day-traders are fickle. They tend to ride short-term trends, then sell quickly. With Trump Media being viewed as a “meme” stock (that is, with little link to fundamentals), the recent price uptrend could quickly reverse.
Here are the short-term trends. Note the previous quick turnarounds.
The bottom line: Do not forget the Trump Media fundamentals
- Trump Media’s financials are weak and only support a single-digit stock price
- The mid-November earnings report for the 3rd quarter needs to reverse the previous reports’ negatives
- The presidential election results could affect the “Trump brand” value of Trump Media