Digital World Acquisition Corp Stock News: Could Friday see fourth day of double-digit DWAC volatility?

DWAC dropped 13.6% on Thursday, making this the third straight day of double-digit volatility for the Special Purpose Acquisition Company (SPAC) that has agreed to merge with Donald Trump's new social media venture. While Monday was ho-hum, Tuesday saw a 16.6% jump, and Wednesday allowed for an even better 28.1% gain.

This week's rally was a product of California Congressman Devin Nunes announcing his acceptance of the CEO position at Donald Trump's new media startup – Trump Media & Technology Group (TMTG) – which owns TRUTH Social. There is no certainty the rally has ended, and DWAC is up more than 3% at $58.29 in Friday's premarket.

Digital World Acquisition Corp Stock News: Premarket optimism

With the market in a generally optimistic mood this Friday morning – futures for the Nasdaq, S&P 500 and Dow are all resolutely green – DWAC may be ready to soar. It is hard to say for sure since institutional investors are mostly steering clear of this name in the premarket, and the retail crowd is what moves this one.

The elevator pitch DWAC/TMTG is that the social media business is “ripe for further segmentation.” Trump voters and American conservatives should flock to a social media channel outside of the mainstream that mirrors their opinions, the company says.

“TMTG aspires to create a media powerhouse to rival the liberal media consortium and fight back against the ‘Big Tech’ companies of Silicon Valley, which have used their unilateral power to silence opposing voices in America,” reads the pitch deck.

Truth Social would highlight Trump’s heavy social media following – 146.5 million followers between Twitter, Facebook and Instagram before his ex-communication – as a selling point. The company points to a survey showing that 30% of those surveyed by The Hill newspaper back in March would join a Trump-back social media platform. Another 16% answered that they would consider it.

TMTG's planned Private Investment in Public Equity (PIPE) deal does not have a scheduled date yet, but investors should watch for when this is unveiled since it would likely crater the share price. This PIPE deal would sell $1 billion worth of shares to institutional investors at a 40% discount to the current market price in most cases.

PIPE investors are then permitted to immediately sell them back to retail investors at the market price once the merger is complete. Purchasing them at a 40% discount may of course lead to a sudden off-loading at a much lower price than the future market price.

Digital World Acquisition Corp Stock Forecast: A retest of $65 in the cards

Piercing the $65 resistance level on Wednesday was a major coup for DWAC traders. This means there is room for a turnaround from the slow decline in share price that has lasted since late October. Wednesday's close at $65.42 represents a new range high.

Waiting for the 9-day to cross above the 20-day moving average is the second signal other traders might hold out for. Breaking above $65.42 should be enough to form a bullish crossover, which would mean that next week should expect even more volume and thus a higher share price.

Above $65, the supply zone between $70 and $75 is the next nearby target.

DWAC has now traded for 50 sessions, which means this is the first day that the SPAC has a 50-day moving average. The moving average begins at $42.57, which should act as support.

DWAC 1-day chart

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