After dipping to a 2017 low of $2.90 in June, Groupon Inc GRPN 4.28% has delivered a surprising rally over the past few months and has overtaken the $5 level for the first time in roughly a year.
The $5 level can be an important level for stocks to maintain from a psychological standpoint. In addition, stocks priced under $5 are off limits for certain institutional investors and short sellers.
Groupon took a run at the $5 back in February when rumors began to circulate that Alibaba Group Holding Ltd BABA 0.69% could be a potential buyer. However, the rally stalled at $4.80 when the rumor mill cooled. The most recent rally seems to be driven by Groupon’s improving outlook. DA Davidson initiated coverage of Groupon with a Buy rating back on Sept. 22. The company has also delivered earnings beats in seven consecutive quarters.
At this point, bulls who have captured the huge rally and bears who are looking for a potential entry point are looking to the chart for answers.
For now, there seems to be no clear resistance between $5.25 and August 2016’s high of $5.94, unless the stock simply overheats and runs out of steam. A pullback to February’s high of $4.80 might not necessarily be…
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