Why Rocket Companies Stock Could Be In For A Big Breakout

On Benzinga’s “PreMarket Prep,” co-host Dennis Dick said he increased his long swing position in Rocket Companies Inc (NYSE:RKT).

The Detroit-based holding company is popular in Reddit communities and with Robinhood traders likely due to its relatively small float of 126.3 shares and high level of institutional ownership.

Institutions own 54.29% of Rocket Companies’ total float. The company also has just under 10% short interest.

With the stock trading down over 50% from its March 2 all-time high of $42.98, Rocket Companies looks like it found a bottom at its all-time low of $16.22 and could be about to make a major reversal.

The stock has recently set up bull flags on both the daily and weekly time frames, indicating a long-term bullish break could be in the cards.

See Also: How to Buy Rocket Companies Stock Right Now

The Rocket Companies Daily Chart: Rocket Companies printed a big bullish engulfing candle on June 23, rising up over 5% on the day, which created the pole in the bull flag pattern.

On June 24 and 25 the stock then consolidated the move, trading sideways on smaller time frames. The consolidation created the flag of the pattern.

Rocket Companies is trading above both the eight-day and 21-day exponential moving averages (EMAs) on the daily chart with the eight-day EMA trending above the 21-day EMA, both which are bullish indicators.

The stock had been trading a total of 200 days as of May 21 so the 200-day simple moving average (SMA) is now available as an indicator. Rocket Companies is trading down about 5% below the 200-day SMA, which indicates overall sentiment in the stock is bearish, but if Rocket Companies breaks out it could easily regain the level as support.

On the daily chart, Rocket Companies has resistance above at $20.30 and $21.26. It has support at $19.59 and $19.03.

The Rocket Company Weekly Chart: The bull flag on Rocket Companies’ weekly chart indicates a bullish break out could potentially last for a number of weeks which could help the stock make a big rebound. The pole of the bull flag was created between the weeks of May 24 and June 7 and the flag was created between the weeks beginning June 7 and June 21.

Last week, Rocket Companies was able to regain the eight-day EMA as support but rejected and wicked from the 21-day EMA. This indicates sentiment is mixed for the short term. It is possible the stock could consolidate in the flag for a few more days. The eight-day EMA is also trending below the 21-day EMA, and bulls will want to see Rocket Companies regain the 21-day EMA as support to force the eight-day EMA to cross back above it.

On the weekly time frame Rocket Companies has resistance at $20.30 and $22.53. It has support at $19.18 and $17.67.

On both time frames, bulls want to see a bullish break up out of the bull flags and for Rocket Companies to pop up over its higher resistance level.

Bears want to see the bull flags negated and for bears to enter Rocket Companies’ stock to drop it down below the flag and toward its next support.

RKT Price Action: Rocket Companies closed flat at $20.14 on Friday.