The bears are growing frustrated that the new issue has climbed so far so fast. Bulls continue to champion the stock, even after its monstrous run.
Lemonade stock has notched a new high for four straight trading sessions, including Tuesday. That’s surprising to some investors, given that the company announced a secondary offering.
The stock was up almost 3% at one point on Tuesday after opening lower by more than 7% and falling more than 9% at the lows. Currently, the shares are down 3% to 4%.
Now the question becomes: Will investors drink in the secondary and squeeze this stock up to new highs, or is the short-term high in place?
Trading Lemonade Stock
After a solid run in early December, Lemonade stock consolidated into support at the 10-day moving average before igniting higher.
The stock topped out at $137.30 — the high for the month and for 2020 — before consolidating again. This time, though, the consolidation took the form of a tightening wedge.
Once Lemonade stock blasted through wedge resistance and the prior 2020 high, it quickly raced up through the two-times range extension and temporarily cleared the 261.8% extension.
Now the stock is struggling with that 261.8% extension, which is reasonable after such a massive run.
From here, I want to give Lemonade some time to digest this latest rally. Keep in mind: The shares are still up almost 50% from the close on Jan. 6 and that’s after the stock rallied more than 76% in December.
On the downside, let’s see how the stock handles a pullback to the 10-day moving average. If it’s support, bulls could see a strong bounce.
On a break of the 10-day moving average, look for a retest of the 2020 high at $137.30 and/or a test of the 21-day moving average, whichever comes first.
Should the shares take out the 261.8% extension and this week’s high at $188.30, then $200 and the three-times range extension at $201 are in play.