We bought Avivagen last Fall in the expectation that it would proceed to break out of the large bullish Falling Wedge pattern shown on its 3-year chart below, but it didn’t and instead dropped to new lows, although it is important to observe that it did not breach the inner trendline of the downtrend. By the time it bottomed in December we were nursing a significant paper loss. However, it has picked up nicely this year so that we are now down only slightly.
The company has developed a breakthrough viable biological and thus environmentally friendly substitute for antibiotics in animal feed, which is clearly good news for both the animals themselves and for their human consumers, so it was reasonable to expect the stock to perform well, but we also have the experience to know that the stockmarket does not conform with ordinary logic.
The company is rapidly opening up markets for these products in various parts of the world, but the BIG NEWS OUT THIS MORNING IS THAT THE COMPANY IS BREAKING INTO THE GIANT US MARKET
. So now let’s examine recent action in the stock in detail on the latest 6-month chart.
The 6-month chart presents a very bullish picture indeed, with the stock surging higher on big volume for several days in January, and then bedding down to consolidate in a bull Pennant pattern with volume dropping back in a most satisfactory manner. This consolidation is allowing time for the moving averages to converge into a more bullish alignment and for the earlier overbought condition to partially unwind, thus building up the charge for the price to vault clear above the 200-day moving average, and this morning’s big news out of the company is likely to be the catalyst to trigger this breakout. It seems probable that this news will trigger a gap up at the open, but those interested should not be deterred by this and should go ahead and buy anyway, since it seems likely to continue higher through the day, and since this news is so positive for the company, it seems unlikely that the stock will come back down again.
The outlook for Avivagen just got a whole lot better, so we stay long the stock and this is a good time to buy or add to positions.
The stock trades in very thin volumes on the US OTC market where for this reason it should be avoided. There are about 33 million shares in issue.
Avivagen Inc website
Avivagen Inc, VIV.V, CHEXF on OTC, closed at C$0.53, $0.386 on 19th February 19.
Posted at 9.15 am EST on 20th February 19.