Rocket's Been Explosive but Its Chart Reveals the Volatility

Rocket Cos. has been explosive over the past few days but volatility is a knife that can cut both ways. Let's look at the chart.
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Rocket Cos.  (RKT) - Get Report has been a wild one over the past few days.

On Friday, shares popped higher on earnings before slipping lower into the close, although the stock still ended higher by almost 10% as it faded from resistance.

Then on Monday shares popped again, giving a further test into resistance but closing strong on the day after an 11.2% gain.

The solid quarter was in addition to the $1.10 a share special dividend the company announced, which follows the $1 billion buyback plan announced in November.

Fireworks were prepped and ready on Tuesday, with shares erupting 71% on the day despite triggering multiple trading halts during the session.

The recent rally is being compared to the Reddit short squeeze plays we’ve seen in other stocks, like GameStop  (GME) - Get Report.

Down 30% on Thursday and the volatility remains quite heavy. Let’s look at the charts.

Trading Rocket

Daily chart of Rocket stock.

Daily chart of Rocket stock.

Rocket has been stuck in a range for months, bouncing between $19 on the downside and $24 on the upside.

The $24 mark is the resistance point I referenced earlier in the article - the one that the stock faded from after reporting earnings.

After back-to-back tests of this mark, shares were prepping for a big move. I was hoping that perhaps Rocket stock could clear the 2021 high and test into the 61.8% retracement. Perhaps if bulls were lucky, the stock could fill the gap near $31.

How remarkably conservative that outlook was.

Shares gapped above the 61.8% retracement and didn’t hesitate to take out the high at $34.42, before topping at $43.

I was hopeful that Wednesday’s pullback would find support at $34.42. Early in the session it did and bulls got a decent bounce as a result, but the move couldn’t stick.

Now well below that mark, let’s see if it closes below it. There is a silver lining though, as shares hold the 61.8% retracement and VWAP support near $28.

If that remains the case, keep an eye on that $34.50 area. That will be the mark that either keeps a lid on Rocket stock or gives it the green light to retest its high at $43.

Above $43 and the 161.8% extension is in play at $44.71.

On the downside, look for a test of the 10-day moving average. Should shares fill the gap from this week’s move, bulls need to see $24 resistance turn into support. Back below is a very bad look.