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PreMarket Prep Stock Of The Day: MicroStrategy

June 22, 2021 4:18 pm
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PreMarket Prep Stock Of The Day: MicroStrategy

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

If you want the biggest bang for your buck, MicroStrategy Incorporated (NASDAQ:MSTR) may be at the top of the list of stocks with which investors can capitalize on Bitcoin (CRYPTO: BTC). 

About MicroStrategy: MicroStrategy is a provider of enterprise analytics and mobility software. It offers the MicroStrategy Analytics platform, which delivers reports and dashboards and enables users to conduct ad hoc analysis and share insights through mobile devices or the web. 

MicroStrategy Server provides analytical processing and job management.

The company's reportable operating segment is engaged in the design, development, marketing, and sales of its software platform through licensing arrangements and cloud-based subscriptions and related services.

Why Are MicroStrategy, Bitcoin Correlated? On Feb. 24, with the company already holding a large stake in Bitcoin, MicroStrategy purchased an additional $1 billion of the token.

The large purchase of 19,452 Bitcoin boosted the company's total holdings of the digital token to 90,531, with an average purchase price of $23,985 per digital token.

MicroStrategy's Rally In Early 2021: Before the announcement of he additional Bitcoin purchase, the issue had an incredible nine-day rally.

The rally was instigated by Bitcoin and its burst from $34,000 to $50,000 in just about the same time period.

The issue traded higher in nine consecutive sessions, rallying from its Jan. 27 close ($540.10) to $1,315 on Feb. 9. It retreated that day to end the session at $1,272.94 for a nine-day return on a closing basis of 136%. 

Although Bitcoin went on to new heights, it became obvious that the nine-day spurt more than accounted for the short-term appreciation in the price of Bitcoin.

MicroStrategy Participates Both Ways: By May 10, the last time Bitcoin traded at $60,000 MicroStrategy had backed off to the $600 area. When Bitcoin had a nasty eight-day tumble, falling to the $30,000 area, the issue went along with it.

Over the same time period, the issue had another leg down as well, falling from its May 10 high of $615.86 to an intraday low on May 19 of $411.58 before rebounding to close at $454.86.

MicroStrategy, Bitcoin Price Action: Just as MicroStrategy peaked ahead of Bitcoin, it may have bottomed ahead of it as well.

It appeared the issue was about to test the low for the move as the result of more offerings to purchase more Bitcoin on June 7, but turned on the day after the release and bottomed at $427.93.

As Bitcoin tested the top itts trading range ($40,000) last week, MicroStrategy with responded with a $200-plus rally, peaking on Friday at $647.65.

MicroStrategy Moving Forward: On Tuesday, Bitcoin breached the lower end of the recent range ($30,000), falling to $28,800. 

However, it staged a nearly $5,000 rally when it peaked at $33,230 around noon.

Meanwhile, MicroStrategy retreated from the $600 area, as Monday’s high was $614, and fell to $513.02 and rebounded back to the $555 area.

The stock ended Tuesday's session 5.13% lower at $553.72. 

On a positive note, that fills the gap or void in price from its June 11 and 14 sessions ($520.97-$544), and the low is well above the low for entire move, which was $411.50. Therefore, on a relative strength basis, the issue is holding up well.

In order for the issue to return to tis former glory, back over $1,300, Bitcoin will have to go the moon. However, if it can stabilize off Tuesday’s price action and reform the base at $29,000, there is no reason it cannot retest the $40,000 level and drag MicroStrategy along for the ride back to the $650 area.

In the event a rebound rally does not materialize, investors in MicroStrategy just may be in store for a retest of the ultimate low for the move ($411.58).

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