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It was a rallying call not unlike others. But when it comes to today’s Digital World Acquisition (NYSE:DWAC) and following an epic and maybe ironic disaster of sorts in DWAC stock, is now a good time to buy shares?
Source: Dmitry Demidovich/ShutterStock.com
Today, let’s look at DWAC stock and its underpinnings both off and on the price chart, then offer a risk-adjusted determination aligned with those findings.
But you knew that already.
DWAC Stock Joins the Club
The fact of the matter is a tidal wave of SPACs have been behind some of today’s most ambitious next, big thing style companies to come public over the past couple years.
As the short list above can attest to as well, SPACs have also produced some of Wall Street’s most wildly-popular and volatile stocks over the past two years.
And DWAC stock has quickly become a card-carrying member of this group.
Just over one month ago, Digital World Acquisition was a blank check financing company still quietly pursuing its intended mission of locating a private company which it could, through the reverse merger process, take public.
Then as with the many before it, that changed overnight.
In late October apish Redditors to be sure, as well as other fervent believers, stormed into DWAC stock and sent shares up as much as 1,650% in two trading sessions.
Behind the mob-like fury was word Digital World Acquisition was going to take former President Donald Trump’s Media & Technology company public vis-à-vis the SPAC process.
Share Price Falls
But the Trump train of sorts derailed.
Since striking an intraday high of $175 on Oct. 22, DWAC stock has shed more than 75% of its former largess and today fetches around $42 a share.
And other than the few investors which caught “all aboard” signal on day one of the news, DWAC has been what the man himself might call “a disaster” of a stock for the majority of its fervent base.
But could there be something to owning DWAC and Donald Trump’s in-tow “TRUTH Social” social media platform whose aim is to rival a liberal media consortium led by Twitter (NYSE:TWTR) and Meta Platforms (NASDAQ:FB)?
If there is, I don’t see it. Others like InvestorPlace’s Alex Sirois will disagree.
Given Trump’s track record of broken blustery promises that have led to multiple bankruptcies, shenanigans in general and a one-term presidency — DWAC stock is what I’d call a loser of a stock.
DWAC Stock Weekly Price Chart
Source: Charts by TradingView
Technically and to be upbeat and bipartisan to DWAC stock’s apish bulls, over the past week shares have filled a price gap associated with the mob’s most insistent theatrics from day two of the short-lived rally.
Don’t get too excited about Digital World though.
The bad news, or where I’d warn against investors against seeing too much value in DWAC, is a possible bearish flag stationed just beneath the 76% retracement level of the stock’s Trump cycle.
Many technicians believe the Fibonacci failure indicates a stronger chance of a full-blown 100% retracement.
And with stochastics beginning to weaken at a time when there should be real signs of strength, consider the possibility of $15 or $20 in DWAC stock first and then maybe $10 a share.
At a minimum and if we’re in disagreement or you’re in denial about DWAC stock and another Trump rally, do yourself a favor and hedge the vote of confidence with some variation of a bullish collar strategy.
On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
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