Robinhood Stock Jumps on News of Trading Volume Surge—Monitor This Key Chart Pattern

Robinhood Markets (HOOD) shares traded more than 12% higher ahead of Thursday’s opening bell after the app-based commission-free brokerage reported a surge in February trading volume as retail traders flocked to the markets to capitalize on surging technology stocks and rapidly rising cryptocurrency prices.

The online brokerage firm synonymous with the pandemic-era meme stock frenzy reported $80.9 billion in equity trading volume during February, representing a 36% increase from January and 41% rise from February of 2023. Options contracts traded in the period rose 12% from January and 33% versus the year-ago month to $119.1 million, while cryptocurrency volume last month totaled $6.5 billion, representing a 10% improvement from January and 86% rise from February of 2023.

Meanwhile, the company’s total net assets under custody for the month swelled 16% from January to $118.7 billion. Net deposits in the period decreased $200 million from the prior month to $3.6 billion but were up from $1.5 billion in February 2023.

Robinhood’s jump in February trading volume coincided with a bullish period for Magnificent Seven technology stocks and leading cryptocurrencies that propelled the Nasdaq 100 Index to a record high and saw Bitcoin close out the month with a gain of more than 40%. Artificial intelligence (AI)-fueled corporate earnings and significant inflows into recently approved spot Bitcoin exchange-traded funds (ETFs) drove market sentiment over the period.

The brokerage, which primarily attracts millennial and Generation Z (Gen Z) customers, believes it’s well positioned to capitalize on opportunities serving a younger demographic.

“I think over the next 10 years, you see the retail trader really come into their own on the strength of increased earnings power, wealth transfer, and I think that Robinhood is incredibly well-positioned to serve those customers as they continue to grow,” Robinhood’s chief financial officer (CFO) Jason Warnick told investors earlier this month at a JMP Securities conference.

Robinhood shares broke above a 15-month trading range in mid-February on above-average volume, indicating buyer conviction behind the move. More recently, the price has coiled within a pennant — a chart pattern that signals a continuation of the current uptrend. Upon Thursday’s expected earnings-driven breakout above the pennant, monitor if the stock can maintain its strong momentum by making higher highs and higher lows.

Shares were up 12.5% at $19.30 about three hours before the opening bell. Through Wednesday’s close, the stock had gained nearly 90% over the past year.

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As of the date this article was written, the author does not own any of the above securities.