Trump Stock DJT Has Had a Wild Week. What Does Its Chart Say?Former President Donald Trump’s Trump Media & Technology Group NASDAQ:DJT has been all over the map this week as we head toward Election Day, up 20% one day and down 10% the next. Let’s check out its technical and fundamentals.
Trump Media & Technology’s Fundamental Analysis
DJT -- parent firm of Trump’s Truth Social social-media site and other assets -- has publicly traded for about seven months now since going public via a merger with a special purpose acquisition company.
Wall Street expects DJT to report quarterly earnings around Nov. 8, but I personally don't think prospects for what the firm releases that day are having much to do with how the stock has been trading.
I don't know of any sell-side analysts who cover the stock, so there are no earnings estimates that I’m aware of.
In terms of recent fundamentals, DJT posted a $0.10 GAAP net loss per share for its June quarter on about $800,000 of revenue.
Operating cash flow printed at a negative $21.4 million, but that cash burn appears to be of little concern to DJT given that the company’s balance sheet appears to be in good shape.
DJT had $344 million of cash on hand and $353.5 million of current assets as of June 30. Current liabilities added up to $14.3 million for a current ratio of 24.72.
You know what’s traditionally good enough to pass muster with many investors? A current ratio of 1.0.
In other words, Trump Media appears to have an incredibly strong balance sheet for a business of its size (i.e., very small). In addition, there’s no debt on the firm's balance sheet.
So, if fundamentals don’t move the stock, what does?
First, it seems like shares rise or fall on any headline regarding the former president and his prospects for winning back his old job in next week’s election.
Second, I suspect that today’s algorithms are designed to force an overshoot up or down for any stock where that can be done – and DJT certainly seems like such a stock.
DJT’s Technical Analysis
Now let’s look at Trump Media’s six-month chart through midday Thursday (Oct. 31):
Readers can see that DJT broke out in mid-September from a so-called “falling wedge,” which is historically a pattern of bullish reversal.
The stock bottomed at $11.75 and broke through both its 50-Day Simple Moving Average (or “SMA,” denoted by the blue line above) and its 200-Day SMA (the red line above) like a hot knife through butter.
In cases like this, many investors will use a stock’s 200-Day SMA as a pivot point, as the 200-day line is senior to the 50-day line. And in this case, the 200-Day SMA has a higher price level -- $35.80 for the 200-day line vs. $22.80 for the 50-day one.
At the time that DJT cracked the 200-Day SMA, it stood close to the $35 level. Hence, $35 appears to have become the stock’s potential pivot point.
Meanwhile, DJT’s Relative Strength Index (the gray line at the chart’s top) is narrowing, but was still sending a somewhat strong signal of about 56 as of Thursday afternoon.
Separately, the stock’s daily Moving Average Convergence Divergence index (or “MACD,” denoted by the black and gold lines and blue bars at the chart’s bottom) looks historically very bullish.
The histogram of Trump Media’s 9-Day Exponential Moving Average (or “EMA,” denoted by the blue bars above) has been well above zero for more than a month now. Meanwhile, the stock’s 12-Day EMA (the black line above) is running above DJT’s 26-Day EMA (the gold line). That’s all typically bullish.
Still, DJT’s chart as a whole is telling me that technically speaking, the stock is close to fairly priced based on its recent $35 pivot point. (Shares were trading at $36 on Thursday afternoon as I wrote this.)
However, there are a few days to go before this election cycle closes, and a new pivot to the upside formed at Wednesday’s intraday high of $54.68. The downside pivot is now DJT’s old upside pivot of about $35 (its 200-day SMA).
Crack that line and help could potentially next show up for the stock at its 21-Day EMA and 50-Day SMA.
(Stephen “Sarge” Guilfoyle is Moomoo Technologies Inc.’s markets commentator. At the time of this writing, he had no position in DJT.)
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