From the behavior of NKLA since it was exposed as a scam in September, it has appeared to hit certain price floors and then stop. For such a volatile stock with huge questions of its legitimacy and ability to remain an ongoing concern, it is striking that the price would sit within a narrow channel for weeks.
Some have theorized that MMs are actively buying and selling within price channels to keep the price from plummeting. They would be doing this so they, their wealthy customers, and the company insiders can exit in an orderly fashion, without alerting the unwashed masses that the house is on fire. This orderly exit keeps the price up while the large blocks are slowly sold off to unsuspecting retail investors.
Additionally, the MMs can sell options contracts for BOTH puts and calls, hedging their risk while taking in large insurance premiums due to the stock's inherent IV, which has run 150-200% for months. By holding it steady, they expire out short contracts.
I believe I've found a pattern in the data. There are 4 periods of unusually calm prices, each running about 7-10 days and holding prices of 24, 22 and 18. There was a runup on the GM deal/no-deal around 12/1, but that dropped back down to the 18 level, again without continuing to drop, but hitting that 18 floor.
If this pattern holds, the floor drops to 16 next week, but it could go to 14 or 12, and then will hold for 7-10 days.
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NKLA appears to be landing at the 16 floor. Barring share dumping or government action, it is likely to hold this position until 12/22.
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I've updated the idea and it seems to have moved to a 17 floor this week, likely holding until 12/24.
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As predicted, the 17 floor held until around Christmas, and now is hovering at 16. I'm looking at a 15 floor starting soon and lasting for another 7-9 days, ending around 1/14.
Great analysis and explains why many stocks act in weird ways
kan13
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hi, thanks for analysys but due to language barrier still not clear understood your opinion. can you clarify if we can buy for long term? thanks again
yolotwice
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@kan13, I would definitely not recommend buying NKLA for the long term. The fundamentals of this company are very weak. My analysis only shows that the price is being propped up at specific price levels for 7 to 10 days.
freedomtoseek
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@yolotwice, What about if we screwed up and bought it for $30 a day before it fell.... should those people keep holding hoping it goes back up or just sell? I won't hold in the long term.... stupid emotion pick! I'm usually so good at sticking to analytics, but I watched a movie on Nikola Tesla and my emotions were too high, haha.
Into context. It's not a huge investment, but $1200 turned to $650 overnight. Not fun, but a risk when you use your heart and not your brain, lol
yolotwice
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@freedomtoseek, I'd probably get out sooner rather than later. There's a possibility that some creative pumping will get it back to $20, but there's so much insider selling and they have a capital need that will require dilution. No revenue possible until 2022.
If it makes you feel any better, I bought $5 puts that expire this month on the opposite emotion and now I regret it, as they're unlikely to be in the money until next year sometime, so I guess it's possible to lose money on this stock in any direction.
freedomtoseek
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@yolotwice, Thanks for the reply. Good advice. I'm new to the game so it has been a year of learning. Having a blast. It's quite thrilling at times.
EmpireConsulting
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@kan13, Seriously you read this and you think there is something saying buy for long term. This is a typical example of the market retail guys buying crap even though there are mounds of info showing it is crap. The broader retail market is seriously dumb. Look at Hertz price rallying 400% when it declared it is going bankrupt or Kodak going up 1000% even though they had not even signed a contract for a business they have no experience in.
yolotwice
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NKLA appears to be landing at the 16 floor. Barring share dumping or government action, it is likely to hold this position until 12/22.