Here’s why the MicroCloud (HOLO) stock price went parabolic

MicroCloud (NASDAQ: HOLO) stock price went parabolic on Monday, helped by the ongoing demand from day traders. The shares jumped by over 83% and reached a high of $12.35. Still, they remain significantly lower than this month’s high of almost $100. 

Why did MicroCloud shares jump?

The US stock market has done well in the past few weeks as the S&P 500 and Nasdaq 100 indices jumped to their record highs.

At the same time, investors are getting greedy as the fear and greed index has risen to the extreme greed area of almost 80.

As always, when this happens, it usually leads to animal spirits or irrational exuberance in the financial market. 

This trend explains why MicroCloud, a Chinese company has jumped sharply. It happened as many day traders moved in and pumped the stock. 

This rebound happened in a high-volume environment. Data by Yahoo Finance shows that the daily volume soared to over 53 million shares on Monday, up from 6.1 million on Friday. MicroCloud’s volume has risen, with the three-month average being over 5.13 million. 

This trend is similar to that of other meme stock companies that have become highly popular among traders. Some of the most notable ones are companies like Phunware, BitBrother, and even Donald Trump’s DWAC.

In most cases, these popular meme stocks don’t end well, as we have seen with Bit Brother, which is at a significant risk of being delisted.

MicroCloud was also at a risk of being eliminated from Nasdaq until it did a reverse stock split that brought its stock above $1.

The company’s fundamentals are not strong. Data shows that its last quarterly revenues were $6.9 million down from $13.4 million in the same quarter in 2022. It has also lost over $30 million in the last three quarters.

HOLO stock price forecast

HOLO chart by TradingView

MicroCloud’s fundamentals are not good at all, meaning that the company may try to use the recent surge to raise additional capital. However, this is not to say that investors should short the stock since a short squeeze is always a possibility.

Now, the stock has remained slightly below the 50-day moving average while the Average True Range (ATR) has jumped. This indicator is usually a sign that bears are still in control. Therefore, the outlook is still bearish and there is a likelihood that it will become a penny stock soon.