Data, recent Reddit discussions and technical analysis indicators suggest that Nikola Corp (NASDAQ:NKLA) could be experiencing a short squeeze, potentially leading to a significant surge in its stock price.
Nikola stock's short interest stands at 20.6%, with 3.28 days to cover.
The Reddit Buzz
NKLA- is 100% about to and is SQUEEZE byu/skkoct inShortsqueeze
A post by skkoct on r/Shortsqueeze has drawn attention to notable options activity surrounding Nikola stock.
The post highlighted substantial buying of call options across various strike prices, indicating a bullish sentiment among investors. Particularly significant were the high volumes of call options purchased, suggesting a growing anticipation of a potential squeeze.
Furthermore, posts on r/wallstreetbets by user MetalCaliber have added to the buzz, with users expressing enthusiasm and confidence in NKLA's prospects.
Nkla Breaking out byu/MetalCaliber inwallstreetbets
Nikola Stock – Technical Analysis Insights
Delving into the technical setup, Nikola stock's price action has been notable.
Chart: Benzinga Pro
Currently, the stock is trading above its 5, 20, and 50-day exponential moving averages, indicating a strongly bullish trend.
This is reinforced by the stock's eight-day and 20-day simple moving averages.
However, caution is warranted as the 200-day simple moving average suggests a bearish signal, hinting at potential volatility ahead.
Chart: Benzinga Pro
Further analysis using other technical indicators provides valuable insights.
The Moving Average Convergence Divergence (MACD) indicator reflects a positive sentiment, with a reading of 0.04, suggesting a bullish signal.
However, the Relative Strength Index (RSI) stands at 77.93, indicates that Nikola stock may be overbought.
Chart: Benzinga Pro
Bollinger Bands analysis offers additional perspectives. The Bollinger Bands (25) for NKLA are currently between 0.52 and 0.90, indicating a bullish zone.
Additionally, recent days have seen a notable increase in trading volume, a favorable sign during upward price movements.
The combination of Reddit discussions about increased options activity and positive technical indicators raises the possibility of a short squeeze scenario for Nikola stock.
If a squeeze occurs, it could rapidly increase the stock price as short sellers rush to cover their positions. Investors should closely monitor developments in options activity and technical indicators to capitalize on potential trading opportunities.
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