Red Cat Holdings Inc. (RCAT:NASDAQ) continues to have the prospect of winning some very big orders for its drones and drone technology, and it is thought very likely that it will do so before much longer, and this being so the stock is believed to be at another favorable buy spot right now.
On the latest 3-month chart — this time period being selected to that we can examine recent action in detail — we can see that it has been in consolidation / correction mode since its bullish high volume upward stab in the middle of June. This pattern is believed to be a bull Pennant that breaks down into a 3-wave A-B-C countertrend reaction that should be followed by renewed and probably vigorous advance.
This morning's drop, which looks like it follows a failed attempt to break higher in the early trade yesterday, has brought it down to strong support not far above its now rising 50-day moving average, which move should mark the completion of the C-wave down and is viewed as throwing up another opportunity to buy it at a very good price.
It's worth keeping in mind the strongly bullish implications of the big high-volume rally in the middle of June because it could very well make such a move again, which is a growing probability given the strong Accumulation line and the way that moving averages are swinging into positive alignment with a bullish moving average cross pending — so next time it makes such a move more of the gains are likely to stick.
The boundaries of the current Pennant pattern are marked on the 14-month chart, which is included so that you can see the large base pattern that has been building out since last October – November, which is now approaching completion. If it breaks out of it by breaking above the resistance shown at the top of it in the US$1.45 - US$1.53 zone, it could run quickly to the vicinity of the highs of last November in the US$2.60 area and perhaps continue higher.
We, therefore, stay long, and this is regarded as a very good point to add to positions.
Red Cat's website.
Red Cat Holdings closed for trading at US$1.12 at 12.16 EDT on July 18, 2023.
Originally published on clivemaund.com on July 18, 2023, at 12.45 pm EDT.
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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.