Trump Media’s May run has seen shares soar, driven by speculation and news, amidst strong short-term bullish signals.
- Trump Media Technology Group (NASDAQ: DJT) shares surged nearly 20% in May alone, with a total increase of over 100% since mid-April.
- Speculation and news related to Donald Trump and a shortage of shares for lending are driving DJT’s volatility and fueling its rally.
- Technical analysis shows intense short-term bullish pressure with the overlap of the 50-day and 150-day Simple Moving Averages (SMAs), indicating the potential for further price increases.
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Trump Media’s May Performance
Shares in Donald Trump’s social media company, Trump Media Technology Group (NASDAQ: DJT), have surged nearly 20% in May alone. Since hitting its low point in mid-April, the stock has skyrocketed over 100% in just a few weeks.
However, Trump Media’s trading performance in May seems driven more by speculation around the stock rather than its business fundamentals. Factors such as news related to Donald Trump and a severe shortage of shares available for lending have been the primary drivers of DJT’s volatility, putting pressure on short sellers and fueling the rally.
Even bearish events for Trump Media have failed to halt the rally. At the start of May, the SEC charged the accounting firm hired by Trump Media & Technology Group, BF Borgers, with “massive fraud” involving more than 1500 SEC filings.
Following the indictment, Trump Media stated on May 6 that it would announce the firm’s dismissal. Since then, shares have rallied around 14%.
DJT Technical Analysis
Looking at the charts, the 50-day Simple Moving Average (SMA) has been overlapping with the 150-day SMA since the end of April, indicating strong short-term bullish pressure and signaling a change in the market trend.
This overlap of the moving averages suggests that the recent share price is increasing compared to its average price over the past 50 periods. This likely reflects an increase in demand for the stock, which could lead to short-term bullish pressure.
As of the trading session on May 10th, DJT’s share price was approximately 20% below its historical high of $79 per share, recorded on March 26, 2024. The moving averages indicate a trend, suggesting the historical high could be broken in the next few days if this pattern continues.
What the Option Chains Are Indicating
Examining DJT’s option chains, the highest volume is observed at the out-of-the-money strike of $60 for option calls expiring on May 17th, indicating a strong expectation that DJT shares could reach this level by then. Similarly, for option chains expiring on May 10th, the highest volume is also at the out-of-the-money option strike of $55.
The significant volume in these out-of-the-money options reinforces the bullish sentiment for DJT in the coming weeks and signals that traders view DJT as a promising short-term profit opportunity.
The Bottom Line
With a minimal float and considerable demand for shorting, DJT becomes an intriguing stock for traders seeking to profit from short sellers.
While Trump Media’s trading performance may seem disconnected from its fundamentals, the technical outlook indicates that traders are still betting on the stock based on momentum and speculation. If this trend continues to consolidate, there should be no barriers preventing DJT shares from once again reaching the all-time high recorded shortly after its debut on the NASDAQ.
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content)
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