Nokia Oyj NOK received an upgrade from Goldman Sachs analyst Alexander Duval from Neutral to Buy on Friday morning. The stock gapped up 3% and started running higher.
The multinational telecommunications and information technology company has also received a buy recommendation from Reddit communities who like the stock. Although Nokia doesn’t have large insider or institutional ownership levels like GameStop Corporation GME and ContextLogic Inc WISH, WallStreetBets and other sub-Reddit communities believe there is a large amount of naked shorting occurring on the stock.
On Jan. 27, Nokia was the target of a short squeeze and its stock skyrocketed 106% in a single day. The following day, on Jan. 28, the stock closed down 52% from the high of $9.79.
On Friday, Nokia busted through two resistance levels, and big volume in the stock makes it appear as though it could be heading higher.
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The Nokia Chart: On June 18, Nokia lost a key support level at $5.15 and struggled to regain the level as support during the subsequent four trading days. On Friday, the analyst upgrade helped Nokia to not only regain the $5.15 level as support but also to jump above another key level at $5.43.
The jump up left behind a gap, however, and because gaps fill 90% of the time, it is likely Nokia will drop down to the $5.18 level in the future. Bulls would like to see this occur sooner rather than later to get the worry out of the way.
In the first two hours of trading Friday morning, over 34 million shares of Nokia had traded hands compared to the 10-day average of 23.68 million. The amount of volume in the stock indicates Nokia has become of interest to traders and investors.
Friday’s strong bullish action allowed Nokia to jump way above the eight-day and 21-day exponential moving averages that were acting as resistance in the days prior. The action also caused the eight-day EMA to cross above the 21-day EMA, which is bullish. The stock is also trading about 27% above the 200-day simple moving average, which indicates overall sentiment in Nokia is bullish.
Bulls want to see consolidation on lower time frames to allow Nokia to gather enough power to head higher. Bulls also want to see Nokia’s stock close the day over the $5.46 level. If it can make a close over the level, it has room to move up toward $5.69.
Bears want to see profit takers come in and drop the stock back down under the $5.46 support. Bears would also like to see Nokia’s stock fall down to fill the gap. After filling the gap, there is a support level just below it at $5.15. If the stock was unable to hold the level as support, it could fall back toward $4.86.
NOK Price Action: Shares of Nokia were trading up 7% at $5.50 at last check Friday.
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