Last week I told you about my trade idea in FAZE. If you missed it or forgot about it, you can read more here. Now whilst this trade didn’t work immediately, as I had hoped, the shakeout provided even better prices to get long the stock. Yesterday FAZE closed strong, in fact, it was the highest ever closing price for the stock. There’s already been a nice move in FAZE, but if it can get above $15 there could be some fireworks today. Here’s what the chart looked like at yesterday’s close:
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FAZE had its SPAC merger 2 weeks ago with B. Riley Principal 150 Merger Corp. A total of 15, 883, 295 shares were redeemed at $10, reducing the float size by 92% (per Benzinga). What this means is that while the company raised a lot less cash than they wanted for the listing, the amount of shares outstanding is very small.
When the amount of shares in a company outstanding is small, this can lead to wild moves when big players smell blood. This is because big money can buy up a lot of shares and effectively push the stock much higher, IF the rest of the market also buys, in that there can be a situation where there are not many sellers left.
These moves can become even wilder if a short seller becomes trapped fighting the stock. I’ve seen this setup time and time again over the last few years.
Thus when I saw FAZE break out, on significant volume on July 25 , I knew I wanted to be in the trade but didn’t want to chase the stock.
Thus I put in a bid in and around VWAP (the volume weighted average price) at $13.10. Given that VWAP is an approximate average price for the day, and my trade idea is that tomorrow we move much higher, this is a good spot to get in.
Well, after refusing to break out immediately, FAZE had a shakeout to $10.20, getting rid of weak hands. Since then, it has skyrocketed in 2 days to a high of $14.92 and its highest ever close at $14.21. If it breaks over $15 today, its blue skies, and there’s no telling how high this stock can go if short-sellers are trapped! I think $20+ could be on the cords. Get your popcorn ready today, folks, because either way, this is going to be an interesting battle! Here’s what the chart looks like at yesterday’s close
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