PreMarket Prep Stock Of The Day: Vericity

PreMarket Prep Stock Of The Day: Vericity

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.

Besides being in the greatest bull market of all time, there are other reasons to avoid shorting stocks in today's environment. One of those reasons is that a low-volume, low-float issue that does not necessarily have huge short interest issue can explode to the upside — even without a catalyst.

This scenario applies to Vericity Inc. VERY, which is Thursday's PreMarket Prep Stock of the Day.

About Vericity: Vericity is a U.S.-based company that, along with its subsidiaries, offers life insurance products to the middle American market. It operates through three segments: Agency, Insurance and Corporate.

The Agency segment operates through eFinancial, which sells insurance products through its call center distribution platform, independent agents and other marketing organizations. 

Related Link: 25 Stocks Moving In Thursday's Mid-Day Session

Vericity's Strange Price History: It's hard to determine the long-term price history of the issue, since it had some strange initial price action back in August 2019. 

On Aug. 15, 2019, it traded 100 shares at $5.75 and didn't trade again until Aug. 19, when it rallied to $8.29 on 431 shares.

Two days later, it spiked to $26.87 and settled at $13.91 on a whopping 12,500 shares.  By Oct. 29, it was at $6.94 on a majority of days with little or no volume.

The issue had another mysterious rally the following day to $11.90 on 8,500  shares.

Vericity's Price, Volume Spike: From that day in 2019 forward, Vericity meandered in no discernible fashion on little or no volume until Wednesday of this week.

Trading on no news, it rallied from $9.65 to $10.06 on much higher volume of 90,900. 

In fact, that one day total almost equals the volume for the entire month of March (96,700).

The stock's volume did not exceed 78,700 in any of the last five months. 

The Machines Take Over: When an issue has a price volume spike similar to Vericity's, it shows up in momentum scanners across the globe, and those traders swing into action. 

If it happens to appear on a Reddit board, that is a bonus. 

Since the issue only has a short float of 16%, it is not super high and not as tasty of a target for a short squeeze. 

Those who are short, with a four-days-to-cover ratio, are feeling some pain. 

VERY Price Action:  The investors behind this rally got things started early when the issue spiked to $33.98 on significant volume around 4:30 a.m. Thursday.

In very active trading, it retreated and began the regular session at $15.23.  Following a quick spike lower to $14.03, it blasted to $21.78 and reversed course. 

The stock was trading 62.33% higher to $16.33 at last check. 

Vericity Moving Forward: Based on its prior sporadic price history, once the volume leaves the issue, it could very well go back to where it came from 

Yet in this market environment, anything can happen and will.

Check out Benzinga's "Power Hour" show on YouTube:

Posted In: insurancePreMarket PrepNewsTechnicalsSmall CapTop StoriesMoversTrading Ideas