MULN stock looks to be stalling, it is time to sell?

MULN stock fell on Tuesday, closing down nearly 5%.
Mullen Automotive shares trading lower again in Wednesday’s premarket.
The EV automaker stock is a momentum play, when it stops it is time to sell.

MULN stock lost more ground on Tuesday as the momentum in retail and meme stocks continues to lose ground. Indeed, momentum in all sectors of the stock market lost ground on Tuesday with the Nasdaq closing over 2% lower. The reasons are pretty well established now but the market picks and chooses its time to focus or ignore them.

Tuesday saw Fed speakers talk with an increasingly hawkish stance on the need to tame inflation. This led yields to spike higher again and so yield-sensitive growth and tech stocks took the brunt of the selling. MULN stock has now had three negative days in succession, this comes after MULN spiked 28% last Wednesday, March 30. So, MULN stock is still ahead by 15% on the week but is likely to see more selling pressure as momentum has turned.

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MULN stock news: Short squeeze seems unlikely

There has been repeated talk about a short squeeze in MULN stock and the latest data from does show a large increase in short interest. The stats as recently from mid-March on Reuters and Benzinga show the short interest running around 4 to 5% and Ortex confirms this. The most recent estimate from Ortex, though, has the short interest currently up at nearer 21% of the free float. While this is high it may be after the spike and not the cause of it.

The MULN stock spike has likely caused more new shorts to enter the stock. Also more importantly in our view is the fact that the recent spike in volume has meant the days to cover this estimated 21% short have dropped to about half a day’s volume. So a short squeeze is unlikely in our view.  

MULN stock forecast: Successive spikes getting lower

We feel momentum has gone for now and more losses are likely. This is a macro-based view as well as behavioral momentum. The chart is not giving any clear signals, but the most recent spike failed to even reach the previous spike high on March 21. This is a feature of meme stocks, each successive spike gets progressively lower and lower. $2.06 is key support, with $4.21 resistance. We have a declining RSI and MACD with the latter about to signal a bearish crossover.

MULN stock chart daily

MULN stock chart, daily

*The author is long GGPI

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