MicroStrategy Breaks Inverse Head-and-Shoulders Ahead of Q1
MicroStrategy shares rose about 47% from February lows and pierced an inverse head-and-shoulders neckline in premarket trade as it prepares to report Q1 results tonight; options skew toward calls.
MicroStrategy Inc. (MSTR) rose roughly 47% from its February low and traded above an inverse head-and-shoulders neckline in premarket action as the company readies its first-quarter earnings report tonight. The pattern break occurred near the $186 area while the stock was trading around $183.80 in early session trade.
Options activity has moved toward bullish bets. The put-call volume ratio fell from about 1.66 ahead of the February earnings to near 0.60 before the Q1 report. Implied volatility on MicroStrategy options is about 74.4%, and option prices are elevated, reflecting expectations for a sizable price swing around the release.
Analysts have raised price targets in recent weeks. B. Riley increased its target to $200 on April 29 and Cantor Fitzgerald raised its target to $212 on April 21, both maintaining Buy ratings.
MicroStrategy reports holding 818,334 bitcoins at an average cost of $75,537. With Bitcoin trading above $80,000, the company shows an unrealized gain near $3.7 billion on those holdings, which affects mark-to-market accounting in quarterly results. Chief Executive Michael Saylor paused additional Bitcoin purchases ahead of the report.
Technical levels traders cite include a neckline near $186.46 and a downside invalidation level around $174.81. Fibonacci levels noted by market participants are 0.618 at about $205.29, 0.786 near $218.69 and 1.0 around $235.77. A measured move from the pattern projects a higher target near $338.91.
Short-term moving averages are also in focus. The 20-day exponential moving average is approaching the 100-day EMA, and market observers note that a crossover could push the stock toward the 200-day EMA. Since early February the share price has risen while average daily trading volume has declined.
The company will release Q1 results tonight. The report will include the impact of Bitcoin revaluation and other items on earnings per share, and market participants will react to the numbers and any management commentary.
