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PreMarket Prep Stock Of The Day: Eastman Kodak

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PreMarket Prep Stock Of The Day: Eastman Kodak

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.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

Despite all the major earnings reports, nobody is talking about those issues. Instead, an issue that was left for dead, Eastman Kodak Company (NYSE: KODK), is the PreMarket Prep Stock Of The Day.

It Pays To Read The Newspaper: When an issue makes a big move, the PreMarket Prep co-hosts like to review the previous day's action to see if anyone got the “memo” early. That's exactly what happened with Kodak on Friday, when it traded nearly 20 times its previous day volume, rallying from $2.10 to $2.62.

Interestingly, some savvy investors caught wind of an article that eventually taken down by Rochesterfirst.com.

Typical Follow-Through After Actual Release: When an issue makes a large move on heavier than normal volume, it catches the attention of high-frequency traders, momentum traders and even hedge funds looking for some action.

As a result, the issue will have to follow through the following day. In the case of Kodak, it rallied from $2.62 to $7.94 on monster volume of nearly 285 million shares and the party was just getting started.

See Also: Kodak Had Some Very Suspicious Trading Activity Ahead Of Drug News

Trump Pump: After the close on Tuesday, President Trump touted the "historic" deal that the U.S. government had reached with the company to produce critical pharmaceuticals to treat the coronavirus. The news had been reported earlier Tuesday morning.

That news instigated nearly another doubling of the issue's price by the end of after-hours trading as it closed at $13.21 on heavy volume. Once again, the party was just getting started.

More Wrong Than Right: When Kodak was being discussed at the top of today's show, it was trading at the $13 area and in no way whatsoever did the hosts fathom the issue would rally to $59.41, followed by a retreat to $26.05, before turning higher again. Keep in mind that it was halted multiple times.

Dennis Dick was reluctant to predict to where the issue would peak, but was confident it "would be back under $5 in six months." For investors long the issue and not trying to predict the top, "keep moving your stops up."

The author of this article mentioned a few monthly highs that were obliterated. Also, for those looking for follow-through, pay attention to the pre-market high (turned out to be $18.50) for the rally to continue.

The early discussion on the issue can be found here:

Trading Advice From A Veteran: Later in the show, Dick went on to urge caution to investors, especially new ones to avoid the issue. He stated this type of price action is a “no touch for me.”

"This stuff is so hard to trade because I cannot control my risk," Dick said. "I like 'boring' stocks that I can control my risk in... [but] if you have some 'casino money,' then, by all means, trade it.”

The latter discussion on the issue can be found here:

Price Action: Blindly buying the issue worked until 10:40 a.m. ET when it finally peaked at $59.46. After a retreat to $53.37, it was halted for five minutes before another halt at $47.25. By 11:03 a.m., it finally found intraday support at $26.05 and is now trading violently in the $30 handle.

While an investor could have made a fortune on the way up, others are losing theirs on the way down.

 

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