By The Life Science Report
Technical analyst Clive Maund charts a medical technology firm and explains why he believes it is an interesting speculative play.
Today, by way of a change from resource stocks, we are going to look at an interesting medical stock, which looks like it is set to recuperate following a brutal bear market, Reliq Health Technologies Inc. (RHT:TSX.V; RQHTF:OTCQB).
As we can see on its 2-year chart below, Reliq Health stock has been through a complete boom and bust cycle, as after a massive ramp and a giant top area, it has come crashing back all the way to where it started. What makes this situation interesting to us is that while the stock has gone back to where it started, the company’s business has not. Without going into detail, what has happened is that the company had some severe issues that required to be dealt with, and now they have been, but its business did not go back to square one, and it has a good flow of orders with many of its original customers coming through to complete deals with the company.
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It is thus interesting to observe that the stock is looking increasingly positive and like it is completing a large low “Hod” base which is also a bullish Falling Wedge. This has allowed time for rotation of stock from weak to stronger hands, symbolized by the neutralization of the MACD indicator and the falling 200-day moving average dropping down to close the gap with the price, which action is now greatly increasing the chances of an upside breakout soon.
On the 6-month chart we can see recent action in detail. This chart reveals that it has been positive, with the sharp 3-day rally on good volume a couple of weeks ago having the characteristics of an impulse wave, or a move in the direction of the primary trend, which action suggesting that the tight sideways pattern of the past couple of weeks is probably a bull Pennant, notwithstanding the rather freakish action last Thursday, that appears to have been due to warrant holders taking profits when the price spiked up to the resistance at about 32 cents intraday, but selling from this source is now over. Thus that sharp move up a couple of weeks ago may be classed as a “preliminary breakout” which implies that a real sustainable breakout above the 200-day moving average is set to occur quite soon, although we should note that as this average is still some way above the price, it may require up to several weeks before this is more likely to occur once this average has dropped down closer to the price and started to flatten out.
Reliq Health therefore looks like an interesting speculative play here, and anyone buying can place a stop beneath the lower boundary of the supposed Pennant, say at just below C$0.23, and the stop should of course be raised if it breaks higher. The 2-year chart tells us that if it does proceed to break out upside, it could run to the C$1.00C$1.10 area, or the underside of the top area, before it encounters more serious resistance, which would result in good percentage gains quite quickly. Reliq trades in good volumes on the U.S. OTC market.
Reliq Health website.
Reliq Health Technologies, RHT.V, RQHTF on OTC, closed at C$0.26, $0.20 on 28th June 2019.
Originally posted on CliveMaund.com at 2.50 pm EDT on 1st July 2019.
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. My company has a financial relationship with the following companies mentioned in this article: None. CliveMaund.com disclosures below. I determined which companies would be included in this article based on my research and understanding of the sector.
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Charts and graphics 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.
( Companies Mentioned: RHT:TSX.V; RQHTF:OTCQB,