The stock ended up falling 0.64% to $17.01 in midday trading, fading hard from their session highs at $18.17. Snap stock has had plenty of bullish momentum lately, but Tuesday's initial spark comes from an analyst note.
Guggenheim analysts upgraded Snap stock to buy and assigned a $22 price target, the highest on Wall Street. From current levels, Guggenheim's new price target implies just over 25% upside.
Can it get there?
Snap has been on fire so far this year, surging more than 200% in 2019. Twitter (TWTR) - Get Report and Facebook (FB) - Get Report don't come close to those returns, but they haven't exactly been weak, either. Shares are up 45% and 40% so far this year, respectively. In other words, social media stocks have been working in bulls' favor.
Will it continue for Snap?
Trading Snap Stock
In early September, Snap stock made a beautiful breakout, shown via the purple arrow on the chart. Shares erupted off the 20-day and 50-day moving averages and burst over downtrend resistance (blue line). What great action.
Suddenly, though, shares collapsed the next day, cascading below all of the significant metrics it broke through in the prior session. From peak to trough, shares fell more than $2 or more than 12% in a few sessions.
When Snap stock appeared to be in breakout mode, the upside target was the 52-week high at $18.36. With Tuesday's rally, Snap stock almost hit this mark after opening higher on Guggenheim's new rating.
So what now? As market volatility starts to pick back up, let's see if SNAP comes down a bit. Below $17 likely ushers in a test of the 20-day or 50-day moving average, and potentially both. Below those marks puts the $15 level on watch.
Should shares hold up above $17 or should Snap stock display relative strength in the coming days and weeks, look for a potential test of the $18.36 high. Should SNAP stock break above this mark, it puts $20 on the table and then finally, $22.
While $22 is Guggenheim's new price target, it also marks the 127% Fibonacci extension -- to the penny.
This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.