The company continues to add large, well-known figures to its exclusive podcast lineup. In May, Spotify added Joe Rogan. Now, it’s adding Kim Kardashian West as an exclusive show, while also inking a deal with DC and Warner Bros.
Shares were slightly higher in premarket trading, up a couple of percent. However, traders caught a spark of momentum, with shares gapping up by about 5% and running higher from there.
While traders didn't know about the pending news, there were clues that Spotify stock was set to run. Mainly the clues were that shares broke out of the recent trading range on Wednesday and closed at session highs.
Let’s look at the charts after Thursday’s powerful follow-through.
Shares posted a strong rally off the March lows, but that’s hardly unique at this point. Almost every stock, good or bad, has rallied off those lows.
However, I love the sharp rise we saw in Spotify stock, as shares broke out over $160 resistance. That was followed by more than a month of sideways consolidation. This lovely little bull flag pattern is resolving higher, which is just what traders were looking for.
Notice how support near $175 continued to hold, while $195 resistance continued to stymie each rally. Spotify consolidated its gains from the prior few months and now patient bulls are being rewarded.
On the upside, I’m looking at $230, which is the 138.2% extension from the March low to the May high. Above that puts the 161.8% extension in play near $250, as crazy as that sounds.
Investors who decide to measure from the March low to the February high instead, may be targeting $240 on the upside, which is the 261.8% extension.
As much as I would hate to see Spotify stock give up all of its gains from today’s action, bulls are still okay so long as the $195 to $200 area holds as support. I don’t expect to see this area unless we see strong selling pressure in the overall market.
However, should it arise and hold as support, that could be an excellent buy-the-dip opportunity, although we’ll need to re-evaluate the stock in the scenario. For now, bulls remain in control.