Those supply and demand forces are exactly what makes
Fannie Mae (
FNMA) look doomed right now.
Fannie Mae has been a roller coaster ride over the last six months. The $2 billion OTC-traded name has seen its share price rally more than 362% year-to-date, but shares are down more than 70% just since the end of May. That's some serious volatility.
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$1.50 has been a key level for FNMA. It was important resistance back in March (signaling a major breakout when it got taken out), and it's been acting as support ever since. Well, until yesterday, that is. FNMA broke $1.50 in yesterday's session, flooding the market with shares and knocking buyers on the ground. From here, downside in FNMA looks most likely, even if we see a hiccup in today's session.
Only experienced traders should play with Fannie Mae. This thing is a whipsaw machine, and I'd argue that risk management is a lot more critical to trading it successfully than timing is.