HCMC a lot of hype - how do we play this move - deep analysisSo we are looking at HCMC on a 1H chart - a short time frame because we must see all the clues in the chart so a short time frame is in order.
A couple of lines on the catalyst news just to make sure you are up to date:
The company deals with health products mostly organic foods and has several vape shops in the USA.
They filled a lawsuit against the giant Philip Morris for patent infringement (‘the 170 patent’) on what they refer to as ‘Electronic Pipe’ this is taken from the SEC report (file number 001-36469) :
“An electronic pipe, comprising:
a battery, an electronic module, a combustible material reservoir, and a heating element fixed in the combustible material reservoir.
combustible material loaded into the combustible material reservoir.
wherein the pipe is structured to transmit an electric current from the battery to the heating element, the heating element initiating a combustion reaction in the combustible material reservoir.”
Ok Let’s try to break it down:
1. - First thing we saw is a healthy trending asset. From 0.000096 till 0.001475- moving in a correction motive pattern which is what we want to see on a stock.
-RSI not overbought and except for rare peaks overall looks good.
- Notice ADX is NOT trending in that part and that means gradual moves up.
- Notice the massive wick on catalyst news that gave us a clear signal that the hype is coming (red square – red star – super important to spot these clues in the chart early!)
2. - Then it exploded upwards – this is HYPE and a lot of it – stock because ‘meme’ trading and was trending on social media and every kid with a TikTok and a trading account started talking about it like we discovered Microsoft in the 90’s – which is obviously not the case . The stock took off from 0.0016 to 0.0064 in 3 trading days – but what goes up must come down.
- RSI peaking to overbought and pullback is in order soon
- ADX losing trending momentum and crossing down from the 60 level of ADX – pullback coming-
3. - Smart money started exiting and left a lot of new retail traders holding the bag. If you ask me we had a lot of money pulling out from the 8th of Feb and started dollar cost averaging out of the trade gradually.
- Notice we have 2 Fib retracements on the chart :
- One from the beginning of trend (26 of Jan)
- Ne from the beginning of impulse move (8 of Feb)
- If we look at the 50 levels of both we will see most pullbacks was already done – but I emphasize the word – MOST – because I think we can get in at a cheaper price on the stock around 0.0032 – that doesn’t mean the pullback will go directly to that level but as we always remind our union traders – patience is in order! so we can see accumulation with a bit of a rise but buying power is getting weaker and who knows if we are also seeing inside buys -which can be reasonable.
4. So what’s next? FDGT will wait on a pullback and for the hype to slightly calm down because we are looking at a lot of new traders in the stock at the moment – which means they can be easily shaken off by drops of price – we will wait to see if we can get the asset on the lows of 0.0032.
5. Given the catalyst of the trial I would suggest easing into the trade with small orders and buying dips till we see the interest peaking again to the higher levels and to start dumping out shares above the 0.007 price. that doesn’t mean our price target is 0.007 but our first stop on taking profits and we need to monitor volumes to see if the hype is getting bigger or smaller to know when is our next stage.
If you want me to cover the next stage just comment here and we will follow up if there is demand.
Let's just quickly cover volumes – so we understand what to look for as a comparison in the upcoming moves :
Avg volume 3 months: 6B
Last month volume : 13.5B (average)
Last week: 20B ( mostly sell volume)
Target volume for future moves: above 10B but must be a buying volume! currently not the case.
3 things worth noting here as the pessimistic view :
1. PM has probably the best lawyers in the world!
2. this trial can go on for years if PM will not offer a settlement!
3. the cost of running a trial for so long will cost Healthier Choices (HCMC) a LOT of money in a court battle!
just keep those points in mind.
Trade safe and be safe – the traders union is here for you!
