3 SPACs to Buy Right Here, Right Now!

SPACs - 3 SPACs to Buy Right Here, Right Now!

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It’s been a terrific market for investors… or has it? Heading into Memorial Day, it’s actually been a less-than-hot 2021 for most SPAC shareholders. But today, in order to help investors through the dog days of summer, I’m going over three diverse plays that are now setting up as solid SPACs to buy.

If nothing else over the past week, the broader market averages have proven there’s still a great deal of FOMO (fear of missing out) programmed into investors. To be fair, the market did correct a few percentage points. Additionally, the CBOE Volatility Index spiked in the past couple weeks. But, just as major benchmarks like the S&P 500 appeared all but ready for further chopping down, buyers have once again stepped up to the plate.

Adding a bit of color, today the S&P 500 is up about 12% year-to-date (YTD) after rallying off its recent lows. What’s more, the broad-based, large-cap barometer is also stationed less than 1% from hitting new record highs. You saw that coming, right?

At the same time, though — in a market also made up of individual SPACs, regardless of where they are in the process — we have also seen a brutal narrative. Corrective losses have piled up since mid-February, as part of a systematic rotation out of higher multiple growth stories. The SPAC market has suffered, having no shortage of these kinds of overachievers.

However, the good news is that today’s bearish SPAC storyline now appears to be due for a shift of gears. While you can be sure to read more doom-and-gloom news and fear mongering down the line, the price charts are strongly suggesting it’s time to back up the truck on three particular SPACs. These names are well-removed from absolute wrecks like Nikola (NASDAQ:NKLA).

  • Draftkings (NASDAQ:DKNG)
  • Opendoor (NASDAQ:OPEN)
  • Arrival (NASDAQ:ARVL)

SPACs to Buy: Draftkings (DKNG)

DraftKings (DKNG) bottoming reversal off channel support
Source: Charts by TradingView

The first of our SPACs to buy is Draftkings. This online sports-betting heavyweight has taken it on the chin by as much as 46% at the stock’s recent low. Plus, some of that punishment came at the hands of mixed earnings results, which featured a wider-than-forecast loss. But don’t be fooled by the fallout.

Today, solid triple-digit revenue growth, upwardly revised guidance, a very promising secular market trend and DKNG stock’s weekly price chart all deserve investors’ undivided attention.

Technically, this pick of the SPACs has been strong as far as the price pattern of DKNG stock is concerned. This week, shares confirmed a two candlestick inside doji bottoming formation developed off up-channel support and 50% retracement level. With stochastics also backing the action with a bullish oversold crossover, it’s a game-on situation in Draftkings today.

To maintain a strong defensive line and offense at the same time, investors may want to approach an Aug $50/$65 collar as a better way to play a winning game.

Opendoor (OPEN)

Opendoor Technologies (OPEN) deeply discounted bottoming
Source: Charts by TradingView

Next up on this list of SPACs to buy is Opendoor. This name is a disruptive online real-estate company using cutting-edge, proprietary algorithms to buy and sell residential properties. Moreover, as InvestorPlace’s Luke Lango recently explained, OPEN’s technology is working big-time as evidenced by the outfit’s most recent earnings results.

Investors may be getting in on a true bargain if Lango’s forecast for $50-plus comes to fruition. But — even if conditions “only kinda sorta” pan out — at today’s price tag of about $16, a double or better would still provide a decent return on investment. Plus, technically, shares of this SPAC are strongly hinting that some upside is in order today.

Right now, OPEN stock is aligned with an inside doji candle buy decision. With shares retracing a fairly evil 66.6% at their lowest level two weeks ago and stochastics on the cusp of a bullish crossover signal, there’s no time like the present. In order to build a better SPAC investment in OPEN stock, I’d recommend using an Aug or Sep dated $17.50/$25 collar combination.

Arrival (ARVL)

Arrival Group (ARVL) breaking through lateral resistance after finding support off bottoming candlestick
Source: Charts by TradingView

Finally, the last of our SPACs to buy is Arrival. As with a sullied Nikola, this name is an electric vehicle (EV) play. Unlike NKLA stock, though, this commercial vehicle upstart is looking every bit the real deal. In fact, it already has a meaningful partnership for 10,000 vehicles now in motion with UPS (NYSE:UPS). Arrival’s management also recently announced a deal with Uber (NYSE:UBER) to develop affordable wheels for its drivers. That should turn into another high-profile win for the company.

Technically, shares of this SPAC are just now breaking above a band of lateral resistance formed over the past month. With the price action developing on top of ARVL stock’s corrective bottoming candle highlighted in yellow and bullish trending stochastics, there’s a lot to like here. As always, however, there are risks as well.

As the provided weekly chart also reflects, the next challenge for bulls is this SPAC’s lifetime downtrend line. Still, if you’re of an optimistic mind, “keep on trucking” action that eventually finds its way high up inside a corrective base looks like a doable target during the second half of 2021. To better position for an emerging bullish trend and to avoid the risk of becoming a crash-test dummy, the Dec $22.50/$30 collar is a favored vehicle of choice.

On the date of publication, Chris Tyler held positions in DraftKings (DKNG) and its derivatives. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.


Article printed from InvestorPlace Media, https://investorplace.com/2021/05/three-spacs-to-buy-right-here-right-now/.

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