The reversal off the low from June is a good guide. It shares a lot of things on the chart with where we are now but lets focus on a few things. First was that on June 27th the stock dropped from 3 cents to just above 2.5 cents and closed at the lows. The following day, June 28th, it opened at the lows, price pierced as low as 2.2 cents, but then it closed off of the lows at 2.8 cents.
That day marked a reversal and then boom went the stock.
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The 10 K was released on June 13th. The 10 Q was released on June 25th. The stock still went down. If you check Facebook you will see that there was a piece of news on June 28th, but it was about Madley being permitted. I don't believe that was the catalyst because there was a permit approval for McComas on the 21st. None of the news releases around this time either gave us increase production news.
What I think happened are two things. First, 2.5 cents was a very strong level of support. Second, the market had a delayed reaction to the news, specifically the financials. People on this board might be ready to buy another 100,000 shares 5 minutes after the financials come out but once again, we are the loyal shoppers and that's not what's going to move the stock.
We just got financials and yet once again we see a few days later we are trading down on an intraday basis and so far not seeing a pop. The rest of the market needs a chance to get wind of the financials, digest it, assess risk reward, and then pull the trigger. Don't count on that happening tomorrow because it is Turkey day, or Friday because most people are going to take a long weekend. So, that is why I am looking to next week.
I think it takes a few days to get a reaction to the financials just like last time. Last time revenue was about 15K, this time it was 75K with other financial highlights. Given that 2 cents is worst case downside that is only a 33% loss and justifies a 3 cent buy without even thinking for a chance at 7 cents.
This should generate enough action to get us a close above the 50 day moving average which is only 3.3 cents. A close above the 50 DMA is a major trigger that upon occurring can get us to 4.5 cents the following day. That is why the bears fought so hard to stuff that print but there is a big difference in trying to stuff 3.5 cents and trying to stuff 3.3 cents when as I mentioned above, 2 cents is worst case with a 33% loss and you have short term guys eying a run to 7 cents. Honestly, there are some traders who will look at this and say 2.5 cents is their worst case and still eye 7 cents on the upside for a quick flip.
I am looking at an 80% chance of this happening next week, with a 70% chance of the week after. This is based on the trade pattern seen on the reversal off of the 2.5 cent hit in late June. If it doesn't occur in that stated time frame then it expires because last time it didn't take 2-3 weeks or for that matter greater for the pattern to play out.
If that is the case then I will just have to watch the higher low pattern continue to develop and watch for that close above the 50 day moving average, which is going to be the trigger for this rally whether it hits on this pattern I identified for next week, or for the longer term pattern.
