Avivagen Inc. (VIV:TSX.V) is an interesting company because it is in the vanguard of the drive to eliminate the non-medicinal use of antibiotics in animal feed, which not only has huge benefits for the animals themselves but for their human consumers because of the alarming spread of antibiotic resistance. Many countries are now banning the use of non-medicinal use of antibiotics in animal feed.
Avivagen is a leading company in the drive to create a safe and effective alternative to antibiotics in animal feed, and to say that this is a massive market is an understatement. As the company says on its website, "In response to this impending global threat (posed by antibiotic resistance), at the consumer level retailers such as McDonald's, Costco and Subway are now sourcing certain meat products raised without the use of antibiotics, and producers such as Cargill and Tyson are planning to reduce or eliminate the use of antibiotics in meat production." So it is easy to comprehend why Avivagen's stock has such huge potential.
Now we proceed to examine the charts for the company's stock. Starting with the long-term 15-year chart, we see that the company has been around for a long time, and clearly, Apple Inc. would have been a better investment up to now. However, this chart reveals that a giant Double Bottom base pattern has formed from 2011 through 2016, and with the price having recently dropped back to the strong support close to the lows of the Double Bottom, thanks to the former CEO or president unwinding his considerable stock position, a process that now looks to be complete, it is clearly very cheap now. So we will now zoom in to see more clearly what has been going on in the recent past on shorter-term charts.
The 3-year chart enables us to see how the price surged out of the Double Bottom in 2016, rising five-fold in a matter of months, but it has since reacted back slowly for two years now to the extent that it has given back virtually all of those gains. In large part this is believed to be due to the former CEO or president unwinding his considerable stock position, as mentioned above, and technically there are signs that this process is complete, which we will see better on the 6-month chart. The two-year downtrend has taken the form of a bullish Falling Wedge, accompanied by a positive volume pattern and volume indicators holding up well all this year and as the Wedge is now closing up, the chances of an upside breakout into a new uptrend are improving rapidly.
The 6-month chart is most interesting as it reveals the inner dynamics of what is now going on. We can see the demand kicking in as the price dug into the support very close to the lows of the big Double Bottom, and this demand has become quite aggressive in recent weeks, causing a number of high volume long-tailed candlesticks to appear, and driving up the Accumulation line. This is a sign of determined accumulation, and with momentum (MACD) starting to swing positive and the falling 200-day moving average closing on the price, we could see a break to the upside soon, and the volume pattern suggests that it will not wait for the 200-day moving average to completely close the gap with the price before it does break out.
With its very positive fundamentals and auspicious technical setup and it being at an excellent entry point at a low level, Avivagen is rated an immediate strong buy. The company has a reasonable 31 million shares in issue. While it does trade on the US OTC market, volumes there are horribly light, so it should not be traded on this market, at least until we see a big improvement in volumes.
Avivagen Inc website.
Avivagen Inc, VIV.V, CHEXF on OTC, closed at C$0.62, $0.40 on 28th September 2018.
Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years' experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.
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Charts provided by the author.
The above represents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.