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I may trade in penny stock land, but that doesn’t mean I’m oblivious to the big name companies.

First off…any news that affects an industry will flow through to the small stocks within, so I’m always up on the latest regardless of market cap.

And second…in an instance like today, many times you’ll see small companies make headlines on deals with mega caps like AMZN. When a microcap gets its name next to a mega cap like that…the amount of attention soars.

Summit Wireless Technologies (WISA) is doing just that this morning, with the newly announced WiSA® custom branded Amazon Storefront.

Up over 40%, the stock is making new highs after bouncing off support at the 200 day MA on Monday.

 

Summit Wireless Technologies (WISA)

Summit Wireless Technologies (WISA) is a leading provider of immersive, wireless sound technology for intelligent devices and next generation home entertainment systems, working with leading CE brands and manufacturers such as Harman, LG Electronics, Klipsch, Bang & Olufsen, Xbox, and others.

Summit Wireless is also a founding member of WiSA®, the Wireless Speaker and Audio Association, dedicated to creating interoperability standards utilized by leading brands and manufacturers to deliver immersive sound via intelligent devices.

The key here is that WiSA Certified™ components from any member brand can be combined to dramatically increase the enjoyment of movies and video, music, sports, gaming/esports, and more.

And momentum for the stock has been gaining recently…with the culmination of today’s report of a new storefront on Amazon that will enable “all WiSA Certified™ products being sold on the Amazon platform to be purchased easily from one page, strengthening the customer experience.”

With only 9.28M shares in the float, per finviz, WISA can make big moves quickly and that’s important to keep in mind because it goes both ways…it can move up fast, but it can also move back down fast.

For that reason, I always exercise caution when looking for trades in stocks like this…relying mainly on chart patterns and other indicators to find a spot that works for me, rather than hype and excitement that causes many to chase stock prices higher.

Where did WISA come from?

This isn’t the first time I’ve covered WISA actually. Back in November, I wrote about the stock’s jump on corporate earnings…

When they announced:

  • 45% increase in Q3 2020 revenue, compared to Q3 2019
  • 17.1% gross margin in Q3 2020, up from 7.6% in Q3 2019
  • Management expects to exceed 100% revenue growth for Q4 2020 year-over-year
  • They also shared new business developments that will spur growth going forward.

Here’s the daily chart from back then…popping out of a long consolidation period, WISA hit resistance at the 200 day MA.

Looking at the daily chart below…it didn’t hold the move that day, but previous resistance became the new support…with the stock staying above the mid 2’s from there on out.

WISA then retook the 200 day MA to end the year with another rally to break the previous highs.

This time finding support at the 200 day MA on pullbacks… breaking below in May but technically holding the level…

This brings us to the current situation…

 

What’s happening now?

After the May 12 corporate earnings report, WISA again blasted to new highs with a peak of 5.63 before pulling back where it found support at the 200 day MA this past Monday.

With news of the new Amazon Storefront out today, the stock blasted off to a high of $7.06 this morning.

But with WISA currently trading in the mid 5’s, below the high of the corporate earnings run, the volatile nature of the low float keeps me in check as I look to exercise patience.

I had to look back a year and a half to find the next resistance levels…

Looking at the chart below, there’s a lot of congestion in the 7 – 9 range. This was back when the company implemented a reverse merger to artificially inflate the price…and you can see how well that worked out.

WISA hit 7.06 this morning but wasn’t able to make a run at 9, as the stock has since pulled back to the mid 5’s.

 

What’s Next for WISA?

With the volatile nature of a low float news move, I’m watching the intraday charts closely here…

WISA gapped up in the premarket, and then ran quickly on the open to a hit resistance at 7.06 where it topped out and pulled back.

Currently trading below the VWAP line (pink line), I am watching a few things here…

First off, I am watching the 4.80 – 5 level to see if it can hold the gap up. I don’t want to buy into the current weakness, so I need to see the stock find support first.

I am also watching to see if WISA can get back above the VWAPas that’s a signal of intraday strength to me.

And lastly I will be watching the trading volume…being midday, it’s trailed off quite a bit on the move down, I want to buy into strength so I would need to see increased buying pressure.

To sum it up…

I won’t be interested in this volatile stock unless it can find support and retake the VWAP line with an increase in buying volume.

If this can happen, I may perk up…

If not, WISA has been trading above the 200 day and shown increased buying interest over the past year, therefore the stock will certainly be on my watchlist in the near future…once it does find its next support level.

Author:
Jeff Williams

Jeff Williams is a full-time day trader with over 15 years experience. Thousands of entry-level and experienced traders alike – day-traders and swing-trade small cap stock traders – credit Jeff with guiding them to turning small accounts into big accounts.

Jeff’s "Small Account Challenge" shows people how to transform accounts from a few thousand dollars into $25k, $50k or even $100k.

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