Considering that its main breakthrough product is enjoying record sales Avivagen Inc. (VIV:TSX.V; VIVXF:OTCQB)'s stock has been sold down to an extraordinary degree as we can see on its latest 20-year chart below.
In recent months it has broken down and dropped still further to new lows and has fallen from over C$0.75 early last year to the current dismal price around 20 cents. Yet all the while its Accumulation has been strong and has made new highs, a divergence which suggests that the chances of its reversing to the upside soon are high, especially as things seem to be going well for the company with record sales of its core product.
A reason for the temporary low price is of course that the company is undertaking a funding exercise with the issue price at 20 cents, which is about where the stock is now. On 28th April the company came out with news that the first tranche of this funding has been completed for proceeds of over $1.5 million which, given that the funding aims to raise up to $5 million, implies that there may be another two such tranches in the pipeline. In any event, this explains the current low stock price and it is clear that once this funding is complete, and it may not very far from complete already, the stock price will be more free to advance.
Moving on to the much shorter-term seven-month chart we see that the downtrend in force from October has since November been quite orderly and it has brought the price down to a low level where a base pattern appears to have been forming above a clear line of support at the CA$0.18 level since mid-March. There are a number of bullish factors to observe on this chart that taken together make a convincing case for the stock advancing soon.
The first is that, although it has been trending lower since last October—November, its downside momentum has been steadily easing as can be ascertained from the MACD line which has been trending back up to the zero line. Next is that the still quite large gap between the price and the falling 200-day moving average is a measure of how oversold it still is. Most convincing of all, however, is the increasingly bullish volume pattern since it hit bottom in mid-March, with upside volume expanding to the point that really aggressive buying is kicking in, as happened several days ago, with the price now close to breaking out of its downtrend.
Lastly, it is worth looking at the recent base pattern briefly on the three-month chart where we can more comfortably see the bullish long-tailed candles that have formed right at the C$0.18 support line, starting with a big bull hammer on the 21st March. Volume since that time has been mostly upside volume which has just over the past week driven the Accumulation line, shown at the top of this chart, strongly higher, a positive sign.
The conclusion is that, whilst we may have to bide our time a little waiting for the remaining tranches of the funding to be taken up, the price at which this funding has been set seems to have forced the stock price down to an artificially low level, enabling us to accumulate it before the pressure comes off and it is free to advance, which the volume pattern and Accumulation line suggests is going to happen. It is therefore rated a strong buy here and furthermore this looks like a good one to go overweight on.
Originally posted on CliveMaund.com on May 3rd, 2022.
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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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.
Disclosures:
1) Clive Maund: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None.
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