We
took profits in Catasys on the 9th September, which turned out to be timely as it has since gone into a rather severe decline. Since the decline started we haven’t been minded to buy it back – until now – because the pattern turned rather ugly, into a Head-and-Shoulders top, and once it broke down from this top, it dropped steeply over the past several trading days.
Now, however, it is looking like the selling has been overdone. It has arrived at a zone of strong support above its 200-day moving average in a quite deeply oversold state. This is a recipe for, at the least, a recovery rally to the underside of the Head-and-Shoulders top, which would result in a gain of about 35% from here, perhaps in a matter of a few days, and given that the drop has already about fulfilled the measuring requirements of the H&S top, we could be at an important intermediate bottom here, which is made more likely by it being in a zone of strong support and above its rising 200-day moving average.
There is a good risk/reward ratio in buying it here with a stop at $0.69, accepting the risk of being shaken out.
Catasys was the subject of an Email alert sent out at 3.28 pm EDT today, which read as follows…
“We have seen a brutal drop in Catasys Inc (CATS) in recent days, following a breakdown from a small Head-and-Shoulders top, which you may recall that we sold for a good profit at about $1.32 two or three weeks ago. Yesterday it put in a hammerlike candlestick above a rising 200-day moving average, a sign that it may be bottoming here, and today it has dropped to a point very close to the intraday low of the hammer. This looks like a very good point to pick it up again, and you have the option of placing a close stop just below the intraday hammer low, accepting the risk that you might be shaken out in coming days. There's no time to write a report before today's close, but we'll have a look at it later. Those interested should give it a go before today's close.
CATS trading at $0.77 at 3.18 pm EDT.”
Catasys Inc, CATS on OTC, closed at $0.77 on 28th September 16.
Catasys Inc
website
End of update.
Posted at 9.15 pm EDT on 28th September 16.